New Threat to Prediction Markets as U.S. Crackdown Expands

A bipartisan group of U.S. senators introduced a bill to ban sports betting contracts on prediction markets regulated by the Commodity Futures Trading Commission (CFTC), including platforms like Kalshi and Polymarket’s U.S. offering. The proposal, known as the BETS OFF Act, would block a growing segment of trading activity tied to sports outcomes. The move signals rising pressure from Congress as prediction markets expand into areas traditionally controlled by state-regulated betting.

What the new bill aims to restrict

Indeed, the legislation would prohibit prediction platforms overseen by the CFTC n from listing contracts linked to sporting events. It also expands beyond sports, targeting so-called “casino-style” contracts such as blackjack, slots, poker, and bingo, according to a WSJ report on March 23.

Democrat Senator Adam Schiff argued that these markets are bypassing existing state protections and operating in a regulatory gap. He pointed to concerns around consumer protection, tribal sovereignty, and the lack of tax revenue that typically comes from licensed betting. In his words:

“The CFTC is greenlighting these markets and even promoting their growth. (…) It’s time for Congress to step in and eliminate this backdoor which violates state consumer protections, intrudes upon tribal sovereignty and offers no public revenue.”

Meanwhile, Republican Senator John Curtis added that exposure to these products is increasing, particularly among younger users, and should remain under state-level control rather than federal derivatives oversight. As he explained:

“Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators.”

The scope goes further than sports. The bill would also ban contracts tied to sensitive events such as war, terrorism, assassination, and government actions, especially where outcomes could be influenced or known by participants.

Why this matters for crypto and prediction markets

Prediction markets have grown quickly by offering binary contracts on real-world events, from elections to economic data. But sports have become one of the largest drivers of volume, putting these platforms in direct competition with companies like FanDuel and DraftKings.

This bill targets that overlap directly. If passed, it would remove one of the most active categories of trading on these platforms, forcing them to shift focus or restructure their offerings at a moment when crypto and blockchain platforms are increasingly shifting their attention to this sector.

It also adds to a broader wave of regulatory attention. Earlier this month, lawmakers introduced a separate proposal, the DEATH BETS Act, aimed at banning contracts tied to violent or ethically sensitive events.

At the same time, the CFTC is working on a formal framework for prediction markets, which could define what types of contracts are allowed going forward.

The outcome is still uncertain, but the direction is clear. Prediction markets are no longer operating on the edge of regulation. They are now firmly in Congress’s line of sight.