Senators from both parties sharply questioned the rapid expansion of prediction markets into sports wagering during a Senate Commerce Committee hearing Wednesday, raising concerns about gambling addiction, consumer protections, sports integrity, youth exposure, and whether federally regulated event contracts are undermining state gaming laws.
- Senators from both parties questioned whether federally regulated prediction markets are effectively operating as unlicensed sports betting, raising various concerns.
- Lawmakers and industry witnesses clashed over whether such platforms fall under Commodity Futures Trading Commission oversight or are circumventing state gaming laws and tribal regulatory frameworks.
- Multiple states have issued cease-and-desist orders or filed lawsuits against prediction market operators, escalating a broader legal fight over federal vs. state authority.
The hearing underscored growing political skepticism toward platforms such as Kalshi, Polymarket, and other exchanges offering sports event contracts under the oversight of the Commodity Futures Trading Commission rather than state gaming regulators. Senators repeatedly framed sports-based prediction contracts as a form of gambling that could circumvent state restrictions and consumer safeguards established since the Supreme Court’s 2018 repeal of the federal sports betting ban.
Sen. John Hickenlooper of Colorado criticized prediction markets’ sports event contracts, arguing they expose young consumers to addictive gambling behavior while operating outside the protections imposed on traditional sportsbooks.
“Prediction markets failed to protect young people who are particularly vulnerable to gambling addiction,” Hickenlooper said, warning that “young men especially” face heightened risks from increasingly aggressive sports wagering products.
Hickenlooper tied the issue to broader concerns about insider information and manipulation risks, citing contracts involving geopolitical events and warning that similar vulnerabilities could emerge in sports betting markets. He is one of multiple lawmakers to introduce federal legislation to ban trading or betting government actions on war, terrorism, and assassinations by people with inside information.
The Colorado Democrat also criticized the CFTC’s perceived inability to regulate sports-related contracts, saying the agency has “literally no experience in regulating sports betting” and lacks safeguards commonly required by state gaming regulators, including advertising restrictions and responsible gambling protections.
“To let the ‘Hounds of Hell,’ the incredible power of mass marketing and social media, to let that, untethered, prey on our young people, I think is unconscionable,” Hickenlooper said.
Bipartisan pushback
The hearing reflected an increasing pushback from U.S. senators from both parties joining alongside state regulators, commercial gaming operators, tribal gaming interests, and public health advocates against federally regulated prediction markets expanding into sports.
Sen. Ted Cruz, chairing part of the hearing, acknowledged prediction markets raise “real and serious questions about legal propriety” and warned that gambling-related scandals involving athletes and insider information risk undermining public confidence in sports. Cruz cited recent cases involving athletes and coaches accused of manipulating outcomes or sharing insider information to profit from wagers, saying integrity is the “foundation” of sports.
Bill Miller, president of the American Gaming Association, argued prediction markets are effectively operating as unlicensed national sportsbooks while avoiding state taxes and regulatory oversight. Miller, who represents the regulated gaming industry, said legal sportsbooks are subject to thousands of state and tribal regulators overseeing age verification, geolocation, anti-money laundering compliance, integrity monitoring, advertising rules, and suspicious activity reporting.
Prediction market sites don’t comply with most of these important regulatory protections, Miller testified.
He also accused prediction market operators of undermining state sovereignty and tribal gaming frameworks, arguing Congress never intended the CFTC to oversee sports wagering through derivatives markets.
“The CFTC was created to regulate markets critical to the functioning of the nation’s economy, not to regulate Monday Night Football,” Miller said.
“Prediction markets are jeopardizing the integrity of sports and making a mockery of congressional intent.” — AGA President & CEO Bill Miller before the Senate Commerce Subcommittee.
— American Gaming Association (@AmericanGaming) May 20, 2026
Hear his closing remarks below. pic.twitter.com/AP5RQg2Nzh
Several senators focused specifically on concerns that prediction markets are reaching younger audiences through social media promotion.
Sen. Marsha Blackburn of Tennessee pressed former House Financial Services Committee chairman Patrick McHenry, now representing the Coalition for Prediction Markets, about whether prediction market companies advertise to minors through social media platforms.
McHenry, the lone representative at Wednesday’s hearing directly representing prediction markets, denied his organization’s companies target children and said coalition members prohibit users under 18 from accessing their products. But Blackburn questioned why firms continue advertising on platforms heavily used by younger consumers.
Hickenlooper later cited social media promotions allegedly tied to Kalshi, including one example involving an influencer claiming she covered two years of rent through successful prediction market bets.
“I know you’re welcoming conversations,” Hickenlooper told McHenry, “but do you think that’s responsible?”
McHenry defended prediction markets as federally regulated financial exchanges rather than sportsbooks, emphasizing that participants trade against one another rather than against a “house” setting betting odds. He argued the products fall under the Commodity Exchange Act and said exchanges already operate with anti-money laundering, know-your-customer verification, surveillance, and trade reporting requirements.
When pressed later in the hearing, McHenry reaffirmed prediction markets’ long-standing contention that Congress gave federal regulators broad leeway to determine the types of eligible event contracts. He also maintained that sports trades have economic utility, saying a game could impact third-party memorabilia vendors or local shops and restaurants.
I sat thru probably hundreds (thousands?) of hours of House hearings while McHenry was a member. Members debated Dodd-Frank, swaps regulation and all manner of financial topics. Never once did McHenry or any other member debate sports gambling oversight at the CFTC https://t.co/T1tn1mgle1
— Amanda Fischer (@amandalfischer) May 20, 2026
McHenry also contended many recent sports integrity scandals occurred through traditional sportsbooks rather than prediction markets.
Still, senators from states opposed to legalized gambling appeared unconvinced.
Utah Sen. John Curtis repeatedly questioned how sports event contracts differ from conventional gambling products, saying many constituents would see little practical distinction between placing money on an uncertain sports outcome through a sportsbook or a federally regulated exchange. Curtis also highlighted concerns that sports contracts could override decisions by states such as Utah and Hawaii that prohibit gambling entirely.
“If products that closely resemble sports betting can be offered nationwide under a federal regulatory framework, what does that mean to the ability of states and tribes to actually enforce the choices they've made?” Curtis said.
Larger battles
The hearing comes amid escalating legal and political battles over sports prediction markets nationwide. Multiple state regulators have issued cease-and-desist orders against prediction market operators in recent months, while companies like Kalshi have challenged those actions in federal court by arguing their contracts fall under exclusive CFTC jurisdiction.
More than a dozen states are involved in lawsuits against the CFTC or prediction markets. Both sides believe the Supreme Court will have to make a final determination of these platforms’ legality.
Prediction market news has increasingly centered on whether sports event contracts represent legitimate financial instruments or simply a new form of sports gambling operating through a federal regulatory loophole. In either scenario, prediction markets’ rapid rise has accelerated the need for federal regulation, said Washington Sen. Maria Cantwell during Wednesday’s hearing.
“We had a financial collapse of our economy because we didn’t do the job of regulating derivatives,” Cantwell said.
