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Congress is weighing whether sports event contracts offered by prediction markets should keep falling under federal commodities oversight or be regulated more like traditional sports betting.
The debate, highlighted in a House Committee on Agriculture hearing, centers on fast-growing platforms including Kalshi and Polymarket. Lawmakers from both parties raised questions about whether these products are financial instruments, gambling products, or something in between.
Rep. Dusty Johnson framed the issue this way: “To many Americans, these products look an awful lot like sports betting. To others, they’re an innovative financial product that can help aggregate information and provide insight into future events.”
The Commodity Futures Trading Commission has defended its authority over these markets through rulemaking and court interventions. Michigan was cited as one flashpoint, where a judge temporarily barred Kalshi from offering sports event contracts before the CFTC stepped into the lawsuit.
Industry critics argued prediction markets are offering sportsbook-like products without the same rules. Christopher Cykle of the American Gaming Association told lawmakers the products are “stripping your constituents of important consumer protections” and reducing tax revenue for local communities. David Bean of the Indian Gaming Association said the CFTC is too short-staffed and relies too heavily on company self-certification.
Others defended the current framework. Former CFTC general counsel Robert Schwartz said the agency has shown it can adapt to new financial products, while former CFTC special counsel Carl Kennedy said customer protections already apply in these markets.
For players, the biggest unanswered question is whether prediction markets will eventually face the same responsible gambling standards and other compliance requirements as sportsbooks. Lawmakers also questioned whether Congress should provide the CFTC with more funding if it remains the main regulator.
What happens next is still unclear. Congress has not passed new legislation, and ongoing disputes among states, the CFTC, prediction market operators, and gaming groups are likely to shape how sports event contracts are treated going forward.
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Source: As reported by AUSTIN DENEAN.
