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Congress is weighing whether fast-growing sports prediction markets should continue to be regulated by the Commodity Futures Trading Commission or face rules closer to traditional sports betting.
The debate centers on platforms including Kalshi and Polymarket, which offer sports-related event contracts. Lawmakers, regulators, states, and gambling industry groups are now arguing over who should oversee those products and what protections should apply to customers.
At a House Committee on Agriculture hearing, Rep. Dusty Johnson, R-S.D., said the core issue is whether these offerings are better viewed as gambling products or as financial contracts. The CFTC has defended its authority, including by intervening in court fights over state efforts to restrict sports event contracts.
One example raised in the discussion was Michigan, where a judge temporarily barred Kalshi from offering sports event contracts. That case became part of the broader fight over whether states or federal regulators should have the stronger role.
Industry critics told lawmakers that prediction markets are offering something very close to sportsbook wagering without following the same rules. The American Gaming Association argued that this setup weakens consumer protections and reduces tax revenue for states. The Indian Gaming Association also questioned whether the CFTC has enough staff and resources to police the market, saying the agency relies too heavily on self-certification by companies.
Others defended the current framework. Former CFTC officials told lawmakers that the agency has adapted to new financial products before and that customer protections already exist in derivatives markets.
The issue has gained urgency as sports contracts grow. According to the source report, Kalshi said it added 3 million new users over the last month, while a Pew Research Center analysis found that sports wagers make up a majority of activity on Kalshi and a significant share of activity on Polymarket.
For players, the main unanswered question is whether these products will keep operating under the current federal structure or eventually be pushed into a regulatory model that looks more like standard sports betting. Lawmakers also questioned whether prediction markets should be subject to the same responsible gambling measures as sportsbooks.
What comes next is still unclear. Congress has not yet settled whether to change the law, give the CFTC more funding, or leave the current system in place while court challenges and state disputes continue.
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Source: As reported by AUSTIN DENEAN.
