U.S. Senators Adam Schiff and John Curtis are expected to introduce bipartisan legislation on Monday that would ban sports betting and casino-style contracts in forecast markets regulated by the Commodity Futures Trading Commission (CFTC), according to a Monday Wall Street Journal report.
“Too many young people in Utah are exposed to addictive sports betting and casino gaming deals that are subject to state control, not federal regulators,” Senator Curtis, co-sponsor of the bill, he said WSJ.
If implemented as reported, the measure would deepen Washington’s pressure on certain contracts in the forecasting market. The report adds to growing regulatory scrutiny of forecast markets amid renewed concerns about insider trading sparked by the U.S.-Israel war with Iran.
On March 10, Schiff introduced the DEATH BETTING Act, a Bill seeking to prohibit CFTC-regulated forecast markets from listing contracts related to war, terrorism, assassination and individual death on the exchange.
Related: Prediction markets experience a betting boom in Iran following Congress’ ban
Sports markets drive trading volume
Sports betting is the leading source of transactions on prediction market platforms. Sports-related contracts accounted for 47.7% of Polymarket’s weekly notional volume last week and 78.8% of Kalshi’s, According to to Dune data.
Sports betting generated weekly nominal trading volume of $1.2 billion for Polymarket and $2.6 billion for Kalshi.
State and federal boundaries are blurring
Regulatory pressure has also intensified outside Congress. On March 12, the CFTC released advice to staff classifying event contracts in forecast markets as a “financial asset class”.
The Commodities Regulatory Authority also issued an advanced notice of proposed rulemaking, seeking public comment on the application of the Commodity Exchange Act (CEA) to forecast markets. Polymarket and Kalshi are regulated by the CFTC as designated contract markets (DCMs).
Related: Kalshi and Polymarket face trading halt in Nevada following court rulings
Although CFTC Chairman Michael Selig claimed that the CFTC had “exclusive jurisdiction” over prediction markets, an Ohio judge verified that claim in a March 9 ruling, finding that Kalshi had not shown that the CEA would “inevitably invalidate Ohio’s sports gambling laws” or that these sports betting agreements would fall under the CFTC’s “exclusive jurisdiction.”
On Friday, a Nevada judge temporarily blocked Kalshi from offering contracts for sports, election and entertainment events in the state for 14 days, saying regulators were likely to succeed in arguing that the markets violated Nevada gaming law.
Cointelegraph has asked senators for comment and a copy of the bill.
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