US Senate Considering Proposal to Ban Sports Predictions

Yet another threat has emerged for the prediction market industry. 

The bipartisan Prediction Markets Are Gambling Act (PMGA) was introduced in the US Senate on Monday. It proposes banning prediction operators from offering sports markets. If passed, it would require the CFTC to stop registering those markets and close the legal loophole.

Senators Adam Schiff (D-CA) and John Curtis (R–Utah) co-authored the bill, showing support from two states with vastly different politics.

Senate Bill Backs States, Tribes

At the heart of the debate over sports prediction markets is the question of whether they are a form of gambling. The industry uses language from the Commodity Exchange Act (CEA) to avoid being labeled as gambling, allowing operators to be exempt from state regulations and taxes. It also allows them to offer sports markets in states where sports betting remains illegal. 

States and tribal gaming groups have been pushing against the industry, arguing it is circumventing gambling laws in states across the US. While they are fighting it in the US court, protections from the Commodity Futures Trading Commission have helped operators remain live.

The wording in the PMGA shows some federal lawmakers agree with the states and tribes, giving them an important group of allies.

Act Would Amend CEA

The most commonly used legal defense prediction operators are the CEA. They continue to argue that the law clearly permits swaps, including sports contracts. While states have challenged the act's interpretation, the CFTC has sided with the industry.

The PMGA would amend the CEA to distinguish between swaps and sports contracts clearly. This would allow prediction markets to remain legal, but bar operators from offering sports involvement. The CFTC would be charged with ensuring no sports-related markets are certified.

If the CEA is amended, it would likely be the final blow for sports predictions in the US.

Bill Faces Long Odds, But Delivers Strong Message

The new bill is a massive win for states, tribes, and the sports betting industry. However, the odds of it becoming law remain slim.

The biggest hurdle will be support from the White House, with the Trump family having strong ties to industry giants like Kalshi and Polymarket. Expect the executive branch to push Senate Republicans to reject the bill, though they’ve already lost the two votes from Utah.

Even if the PMGA passes in Congress, it would almost certainly face a veto from President Trump. This would force proponents to find more support among Republicans, a tall task.

While passing the PMGA is the best-case scenario, the bill's introduction has already scored a win for industry opponents. It shows strong bipartisan support at a time when Republicans fear losing power during the Midterm elections. This could force the White House to negotiate new regulations, which would even the playing field between sports betting and prediction markets.