The stocks of sports betting companies enjoyed a positive jolt on Monday after it was revealed that U.S. Senators were attempting to block sports contracts at popular prediction platforms.
The bipartisan proposal would prevent platforms such as Kalshi and Polymarket from offering contracts related to the outcome of sports events.
Key Takeaways
- The bill was the first bipartisan proposal to shut down sports contracts.
- Leading prediction platforms have faced lots of pushback for allowing trading on sports events.
- DraftKings and FanDuel are prepared to match the prediction industry’s momentum by investing in their own markets
Sports betting companies have not enjoyed their start to 2026. The brisk growth of prediction markets, combined with their long-term potential to cannibalize sports betting’s customer base, left investors skeptical about legal sportsbooks’ financial future.
Those worries were given a reprieve on Monday when reports revealed that the Senators planned to introduce their bill.
First reported by the Wall Street Journal, the proposal would prohibit prediction platforms from offering sports contracts and “casino-style games.” The former has proven to be quite controversial, with state officials all over the country raising objections and, in certain cases, going to court with operators.
PENN Entertainment, which powers theScore Bet, enjoyed the largest price increase (5.6%) during Monday’s trading window. MGM Resorts International (BetMGM) and Flutter Entertainment (FanDuel) both rose 4.4%, and DraftKings climbed 1.2%.
Tuesday’s early results offered a mixed bag. DraftKings was back down 2% to $23.48, while Flutter also dropped 0.3% to $109.04.
MGM and PENN both continued to climb with 0.5% ($37.15) and 0.4% ($14.50) gains before noon Eastern on Tuesday.
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Why the challenge?
Legal sports wagering platforms are state-licensed entities that offer betting odds to customers. They are subject to local regulation and share their profits with the state and, if appropriate, local governments.
Sportsbooks in need of market access partners can also be required to share their earnings with casinos, sports teams and venues, and other valid partners.
Prediction markets operate under a much different framework. They are federally regulated by the Commodity Futures Trading Commission and have claimed that they don’t need to collaborate with state officials. Their contract market prices are based on real-time customer dynamics, which they argue is the key difference between them and sportsbooks and why they don’t represent gambling.
That sentiment is far from universal.
“Sports prediction contracts are sports bets — just with a different name,” said Sen. Adam Schiff (D-CA), alongside Sen. John Curtis (R-UT), in a statement announcing the Prediction Markets Are Gambling Act.
A Kalshi representative claimed that the proposal was born out of jealousy and a fear of competition.
“It’s clear this bill is motivated by casino interests that are threatened by competition,” spokesperson Elisabeth Diana told MarketWatch. “They’re more worried about protecting their monopolies than protecting consumers.”
Prediction platforms on the rise
To say that prediction markets enjoyed an extreme increase in notoriety over the last year would still be an understatement. The Wall Street Journal reported earlier this month that market leaders Kalshi and Polymarket received valuations of approximately $22 billion during preliminary talks with investors about fundraising, roughly double the figures they were given toward the end of 2025.
That did not occur without any issues. Kalshi was recently prohibited from offering sports, entertainment, and election contract trading in Nevada after a court issued a temporary restraining order against the company. Arizona’s Attorney General last week also filed criminal charges against the company’s “illegal gambling market.”
Several sports betting companies, including FanDuel and DraftKings, tried to match the growth of prediction platforms by launching their own prediction markets. Those are yet to take hold like the market leaders, although both said they were prepared to invest heavily in their development.
