Sports Prediction Markets Ban: What the New Bill Means
A bipartisan Senate bill introduced on March 23, 2026 would ban prediction markets from offering sports event contracts, directly threatening platforms like Kalshi and Polymarket. Senators John Curtis (R-Utah) and Adam Schiff (D-CA) are leading the charge with legislation formally titled the “Prediction Markets are Gambling Act.” The move sent gambling stocks higher and forced both major prediction market platforms to rewrite their rules within hours.
The Bipartisan Bill That Could Reshape Sports Betting
Who Is Behind the Legislation
Senator John Curtis, a Republican from Utah, and Senator Adam Schiff, a Democrat from California, are jointly leading the push to shut down sports event contracts on prediction markets [1]. The bipartisan nature of the bill signals that opposition to prediction markets in sports is not a partisan issue. Both sides of the aisle appear aligned on the view that these contracts cross into gambling territory.
The bill carries a blunt name: the “Prediction Markets are Gambling Act.” That title alone signals the legislative intent, framing prediction market sports contracts not as financial instruments but as regulated gambling products. If passed, the legislation would prevent platforms like Kalshi and Polymarket from offering contracts tied to sporting events [1].
The timing is notable. Major League Baseball announced late last week that it would partner with Polymarket, citing a memorandum of understanding with Michael S. Selig, the chair of the Commodity Futures Trading Commission, to “further protect the integrity of baseball by ensuring swift response to incidents and anticipating emerging trends more strongly” [1]. The Senate bill arrived days after that announcement.
Why Sports Contracts Are the Target
Prediction markets have grown rapidly as alternatives to traditional sportsbooks, allowing users to trade contracts on the outcomes of events. Investors had already been pricing in the threat: Flutter stock was down 50% year-to-date before the bill dropped, and DraftKings had fallen 32% over the same period, according to Gambling911.com [1]. The market feared prediction markets would eat into the dominant share held by traditional sports betting apps.
The bill directly addresses that competitive threat by seeking to classify sports prediction contracts as gambling, which would subject them to a different regulatory framework than the commodity futures rules under which they currently operate. That reclassification, if it holds, would be a significant legal shift for the entire sector.
Gambling Stocks Jump as Prediction Market Threat Dims
Flutter and DraftKings Both Climb
The market reaction on Monday morning was immediate and positive for traditional sports betting companies. Flutter, the parent company of FanDuel, rose 5.0% after the bill was introduced [1]. DraftKings gained 2.3% on the same day [1]. Both moves came against a backdrop of steep year-to-date losses driven by investor concern over prediction market competition.
Flutter had lost 50% of its value so far in 2026 before Monday’s bounce, while DraftKings had shed 32%, according to Gambling911.com [1]. Those declines reflected sustained anxiety that Kalshi and Polymarket were pulling users away from licensed sportsbooks. The Senate bill, at least temporarily, relieved some of that pressure.
The stock moves illustrate how seriously the financial markets view prediction markets as a competitive threat to established operators. A single legislative announcement was enough to move two major publicly traded companies by meaningful percentages in a single session.
What the Stock Reaction Tells Us
When a bill that has not yet passed into law moves stocks by 2% to 5%, it signals that investors believe the legislation has real teeth or at least real momentum. The bipartisan sponsorship likely contributed to that confidence. A bill backed by both a Utah Republican and a California Democrat carries more credibility than a single-party effort.
For online casino and gaming readers, the stock movement is a useful signal about where regulatory pressure is heading. Traditional licensed operators stand to benefit if prediction market sports contracts are restricted, which could redirect users back toward regulated sportsbooks and casino platforms.
How Kalshi and Polymarket Responded
Kalshi’s Targeted Restrictions
Kalshi moved quickly on Monday to institute new guardrails in response to the Senate initiative [1]. The platform said it would ban political candidates from trading on their own campaigns. It also announced it would preemptively block anyone involved in college or professional sports from trading contracts related to the sports they play in or are employed by [1].
These restrictions are targeted and specific. Kalshi is not banning all sports trading, but it is cutting off the participants most likely to have insider knowledge or the ability to influence outcomes. The move appears designed to demonstrate self-regulation before Congress imposes it externally.
Polymarket’s Broader Approach
Polymarket went further than Kalshi with a wider rewrite of its rules [1]. The company updated its terms to state clearly that users cannot trade on contracts where they might possess confidential information or could influence the outcome of an event. That definition extends beyond athletes to include company officials, policymakers, or anyone with enough influence to affect an event’s outcome or access advance information [1].
Neal Kumar, Polymarket’s chief legal officer, issued a statement saying: “These rule enhancements make our expectations abundantly clear for every participant across both platforms” [1]. The quote suggests coordination between the two platforms, or at least parallel messaging, as both rushed to show lawmakers they could self-police.
| Platform | New Restriction | Scope |
|---|---|---|
| Kalshi | Ban on political candidates trading own campaigns; block sports participants from related contracts | Targeted: specific categories of insiders |
| Polymarket | Ban on trading where users possess confidential info or can influence outcomes | Broader: athletes, officials, policymakers, any influential party |
The contrast between the two approaches is telling. Kalshi drew narrow lines around known risk categories. Polymarket opted for a principle-based rule that could apply to a much wider set of participants. Whether either approach satisfies lawmakers remains to be seen, but both platforms clearly felt the pressure to act before legislation forced their hand [1].
The MLB partnership with Polymarket, announced just days before the bill dropped, adds another layer of complexity. MLB framed the deal around integrity protection, but the Senate bill suggests some lawmakers view the partnership itself as part of the problem rather than the solution.
What This Means for Online Casino and Gaming Players
For anyone who uses online gaming platforms, this legislative push is worth watching. If the “Prediction Markets are Gambling Act” passes, sports prediction contracts on platforms like Kalshi and Polymarket would likely be shut down or heavily restricted. That would push sports bettors back toward licensed sportsbooks operated by companies like FanDuel and DraftKings, which already operate under state gambling regulations.
The broader implication is that regulators are drawing clearer lines between financial instruments and gambling products. Prediction markets have operated in a gray zone, regulated as commodity futures rather than gambling. If Congress closes that gap for sports contracts, it could signal future scrutiny of other event-based trading products. Players and bettors should stay informed as this legislation moves through the Senate.
Key Takeaways
- Senators John Curtis (R-Utah) and Adam Schiff (D-CA) introduced the “Prediction Markets are Gambling Act” on March 23, 2026, targeting sports event contracts on prediction platforms [1].
- Flutter, FanDuel’s parent company, rose 5.0% on Monday after the bill was announced, despite being down 50% year-to-date [1].
- DraftKings gained 2.3% on the same day, having lost 32% of its value so far in 2026 [1].
- Kalshi banned political candidates from trading their own campaigns and blocked sports participants from trading related contracts [1].
- Polymarket rewrote its rules to prohibit trading by anyone who possesses confidential information or can influence an event’s outcome, including athletes, company officials, and policymakers [1].
- Neal Kumar, Polymarket’s chief legal officer, confirmed the rule changes in a public statement [1].
- Major League Baseball announced a partnership with Polymarket late last week, citing a memorandum of understanding with CFTC chair Michael S. Selig on integrity protection [1].
Frequently Asked Questions
What is the Prediction Markets are Gambling Act?
It is a bipartisan Senate bill introduced on March 23, 2026, by Senators John Curtis (R-Utah) and Adam Schiff (D-CA) that would ban prediction market platforms from offering event contracts on sports [1]. The legislation frames sports prediction contracts as gambling products rather than financial instruments.
Why did Flutter and DraftKings stocks go up after the bill was announced?
Investors viewed the bill as reducing the competitive threat posed by prediction markets to traditional sportsbooks [1]. Flutter rose 5.0% and DraftKings gained 2.3% on Monday, though both stocks remained deeply negative for the year, down 50% and 32% respectively [1].
What new rules did Polymarket put in place?
Polymarket rewrote its rules to prohibit users from trading on contracts where they might possess confidential information or could influence the outcome of an event [1]. This applies to athletes, company officials, policymakers, and anyone else with sufficient influence or advance knowledge, according to chief legal officer Neal Kumar [1].
Did MLB’s Polymarket partnership affect the legislation?
Major League Baseball announced its partnership with Polymarket the week before the Senate bill dropped, citing a memorandum of understanding with CFTC chair Michael S. Selig focused on protecting baseball’s integrity [1]. The Senate bill followed that announcement within days, though the source material does not confirm a direct causal link.
The Bottom Line
The “Prediction Markets are Gambling Act” represents the most direct legislative challenge yet to the prediction market industry’s expansion into sports. With bipartisan backing from Senators Curtis and Schiff, the bill carries more political weight than a single-party effort would. The immediate responses from Kalshi and Polymarket, both rolling out new restrictions on the same day the bill was introduced, show that the platforms understand the stakes [1].
Traditional sportsbook operators like FanDuel and DraftKings got a short-term boost from the news, but the underlying story is about a regulatory battle that will define how Americans bet on sports for years to come. The MLB-Polymarket partnership, announced just before the bill landed, adds a layer of irony: a league partnering with a platform that Congress now wants to restrict. How that tension resolves will shape the next chapter of sports betting regulation in the United States.
Sources
- [1]: Gambling911.com – Reporting on the Prediction Markets are Gambling Act, platform responses from Kalshi and Polymarket, stock movements for Flutter and DraftKings, and the MLB-Polymarket partnership announcement.
