Prediction Markets Gambling Act Targets Federal Reclassification of Event Contracts as Sports Bets

By James O’Connor, Regulation Editor

Prediction markets gambling act legislation introduced by Representatives Adam Schiff and John Curtis in March 2026 has reignited the federal debate over whether event-based contracts are financial instruments or wagers. The bipartisan bill — formally titled the Prediction Markets Are Gambling Act — would prohibit federal entities from listing contracts that resemble sports bets and return regulatory authority to state gambling commissions. For the online iGaming industry, the bill threatens to reclassify a fast-growing category of wagering products and disrupt operators who have built their business models on the current regulatory gray zone.

Prediction Markets Gambling Act Targets Regulatory Loophole

The bill’s central claim is straightforward: prediction markets that allow participants to bet on the outcome of sporting events, elections, or other binary events function as gambling products, regardless of how they are marketed. Under current federal law, the Commodity Futures Trading Commission (CFTC) oversees event contracts traded on designated exchanges. That framework has allowed platforms like Kalshi, Polymarket, and others to offer sports-adjacent products — including contracts on NFL game outcomes and player performance metrics — without obtaining state gambling licenses.

The prediction markets gambling act would strip CFTC jurisdiction over contracts that the bill’s sponsors argue are functionally indistinguishable from sports bets. Instead, these products would fall under the regulatory authority of state gaming commissions, subjecting them to the same licensing, taxation, and consumer protection requirements that apply to DraftKings, FanDuel, and other licensed sportsbook operators.

Representative Schiff framed the legislation as a consumer protection measure, arguing that prediction market platforms lack the responsible gambling safeguards — deposit limits, self-exclusion programs, age verification — that regulated sportsbooks are required to implement. Representative Curtis, a Republican co-sponsor, emphasized the states’ rights dimension, arguing that federal agencies should not preempt state authority over gambling regulation.

Why the Prediction Markets Gambling Act Matters for iGaming Operators

Licensed sportsbook operators have watched prediction markets capture a growing share of sports wagering volume without bearing the same regulatory costs. Platform licensing fees, responsible gambling mandates, advertising restrictions, and state-by-state compliance requirements create substantial operating expenses for traditional sportsbooks. Prediction market platforms, operating under CFTC oversight, face none of these obligations.

The American Gaming Association has publicly supported reclassifying sports-related event contracts as gambling products, arguing that the current regulatory asymmetry creates an unlevel playing field. If the prediction markets gambling act passes, event contract platforms would need to obtain state gambling licenses in every jurisdiction where they operate — a process that takes months, costs millions in compliance infrastructure, and subjects operators to ongoing regulatory scrutiny.

State-Level Enforcement Is Already Accelerating

The federal bill arrives amid escalating state-level action against prediction market platforms. Multiple state attorneys general have opened investigations or filed lawsuits targeting platforms that offer event contracts to residents without state gambling licenses. These enforcement actions assert that existing state gambling statutes already cover prediction market products, regardless of federal regulatory classification.

The combined pressure from federal legislation and state enforcement creates a two-front regulatory challenge for prediction market operators. Even if the federal bill stalls in committee — which remains the most likely short-term outcome — state-level actions could force platforms to geofence entire jurisdictions or restructure their product offerings to avoid classification as gambling.

Crypto Prediction Markets Face Additional Scrutiny

Blockchain-based prediction platforms face the sharpest regulatory risk. Decentralized platforms that operate without a US legal entity are difficult for regulators to reach directly, but the prediction markets gambling act includes provisions targeting payment processors, custodians, and other infrastructure providers that facilitate access to these platforms. The approach mirrors enforcement strategies used against offshore online casinos — if you cannot shut down the operator, you choke off the money flow.

For the regulated iGaming sector in markets like Singapore, the US debate offers a cautionary example of what happens when regulatory frameworks fail to keep pace with product innovation. Platforms that exist in legal gray zones attract customers, build market share, and then resist reclassification efforts — creating enforcement challenges that clear upfront regulation would have prevented.

The American Gaming Association has argued that consumer protection, not market structure, should drive the regulatory response. Whether the prediction markets gambling act gains enough congressional support to advance beyond committee hearings in 2026 remains uncertain. What is clear is that the days of prediction markets operating outside the gambling regulatory perimeter are numbered — the only question is whether reclassification happens through federal legislation, state enforcement, or a combination of both.

Prediction Markets Gambling Act Sets the Stage for 2027 Showdown

The bill’s bipartisan sponsorship gives it a better foundation than most gambling-related legislation typically receives in Congress. However, powerful opposition from the fintech and Web3 lobbies — which argue that event contracts are fundamentally different from sports bets — will likely slow its progress. Kalshi and Coinbase have both invested heavily in lobbying against reclassification, and their argument that prediction markets serve a legitimate price-discovery function resonates with lawmakers skeptical of expanding state gambling authority.

For online iGaming operators, the outcome of the prediction markets gambling act will shape the competitive landscape for years. A reclassification that forces event contract platforms to compete on equal regulatory terms would remove a significant source of unlicensed competition. A failure to pass, conversely, would embolden prediction market platforms to expand further into sports wagering territory — blurring the line between regulated and unregulated betting products in ways that could ultimately undermine public confidence in the entire legal gambling framework.