Bipartisan Senate Bill Targets Prediction Markets: Sports Betting Stocks Rally
A rare bipartisan alliance in Washington is shaking up the gambling industry. Senator John Curtis (R-Utah) and Senator Adam Schiff (D-California) introduced legislation on May 2025 to prohibit sports-event derivative contracts on prediction markets regulated by the Commodity Futures Trading Commission (CFTC), sending sports betting stocks sharply higher within hours of the announcement.
Curtis and Schiff Introduce CFTC Sports Derivatives Ban in 2025
What the Legislation Actually Proposes
The bill directly targets prediction market platforms that operate under CFTC oversight, such as Kalshi and Polymarket, which have expanded aggressively into sports-event contracts over the past two years. Under current CFTC rules, these platforms can legally offer contracts tied to the outcome of sporting events, functioning in a regulatory grey zone that sits outside traditional state-licensed sports betting frameworks. The new legislation would close that gap by explicitly prohibiting sports-event contracts on any CFTC-regulated exchange.
Senator Curtis represents Utah, a state with a long-standing constitutional prohibition on gambling of any kind. Senator Schiff represents California, where tribal casino operators have spent hundreds of millions of dollars defending their exclusive rights to gaming revenue and view prediction markets as a direct threat to that sovereignty. The two senators arrive at the same legislative destination from very different political roads, which is precisely what makes this bill credible and difficult to block.
The bill’s introduction follows a period of explosive growth in prediction market sports volumes. Sports derivatives reportedly accounted for up to 80% of total trading volume on some prediction market platforms during the 2024 NFL football season, according to industry data cited by Casino.org [1]. That figure alarmed both regulators and established sportsbook operators who face strict state-by-state licensing requirements.
Why the CFTC Is at the Centre of This Fight
The CFTC regulates commodity and derivatives markets at the federal level, and prediction market platforms have successfully argued that event contracts qualify as financial derivatives rather than bets. This classification allowed companies like Kalshi to launch sports contracts after winning a federal court ruling in 2024 that overturned a CFTC attempt to block them. The Curtis-Schiff bill would override that court precedent through direct legislation, removing the legal ambiguity that prediction market operators have exploited.
Traditional sportsbooks, including DraftKings and Flutter Entertainment’s FanDuel, operate under state gaming licences that require extensive compliance, tax payments, and consumer protection measures. Prediction market platforms operating under CFTC rules face a lighter regulatory burden, giving them a structural cost advantage. That regulatory arbitrage is the core grievance driving the bipartisan coalition behind this bill.
Flutter Jumps 5% and DraftKings Rises 2% on Bill News
Immediate Market Reaction to the Legislation
Financial markets responded instantly. Flutter Entertainment, the Dublin-headquartered parent company of FanDuel, rose more than 5% in midday trading on the day the bill was announced [2]. DraftKings, the Boston-based sportsbook operator, gained nearly 2% in the same session. Investors interpreted the legislation as a direct competitive benefit for licensed sportsbooks, which would face less pressure from CFTC-regulated rivals if the bill passes.
Sports betting stocks have had a volatile 2024 and early 2025, with profitability concerns and state tax increases weighing on valuations. The Curtis-Schiff bill gave the sector a rare positive catalyst. Penn Entertainment and MGM Resorts, which also operate sports betting platforms, saw smaller but positive moves in sympathy trading on the same day.
Analysts at several investment banks noted that even the introduction of the bill, independent of its eventual passage, signals growing Congressional appetite to rein in prediction markets. That signal alone is enough to shift competitive dynamics in the near term, as prediction market platforms may self-limit their sports offerings to avoid becoming the primary target of federal enforcement action.
What a Potential Ban Means for Prediction Market Companies
Kalshi and Polymarket, the two largest CFTC-regulated prediction market operators, have not publicly commented on the specific bill as of its introduction date. Kalshi had previously celebrated its 2024 court victory as a landmark moment for prediction markets as a legitimate financial product. A legislative ban would not shut these platforms down entirely, as they would retain the ability to offer contracts on political, economic, and other non-sports events, but it would eliminate what has become their highest-volume category.
The sports contract segment is not a minor feature for these platforms. With sports derivatives representing up to 80% of volume during peak football season [1], losing that category would fundamentally alter their business models and likely their valuations. Venture capital investors who backed prediction market expansion into sports would face significant write-downs on that growth thesis.
Prediction Markets Grew 400% Between 2022 and 2024
| Platform Type | Regulator | Sports Betting Status Under Bill |
|---|---|---|
| Prediction Markets (Kalshi, Polymarket) | CFTC (Federal) | Banned if bill passes |
| Licensed Sportsbooks (DraftKings, FanDuel) | State Gaming Commissions | Unaffected, competitive benefit |
| Tribal Casino Operators (California) | Tribal Compacts + State | Strongly supportive of ban |
| Offshore Betting Sites | None (US-facing) | Outside bill’s scope |
The prediction market industry expanded dramatically following the U.S. Supreme Court’s 2018 Murphy v. NCAA decision, which opened the door to state-by-state sports betting legalisation. While traditional sportsbooks navigated state licensing processes, prediction market operators pursued a parallel federal strategy, arguing their products were financial instruments rather than bets. By 2024, total prediction market trading volumes had grown roughly 400% compared to 2022 levels, driven almost entirely by sports and political event contracts, according to reporting by Gambling News [2].
The American Gaming Association, which represents licensed casino and sportsbook operators, has lobbied aggressively against CFTC-regulated sports contracts since 2023. The AGA argues that prediction market sports products are functionally identical to sports bets and should face identical regulatory requirements, including age verification, problem gambling programmes, and state tax contributions. That argument now has two U.S. senators formally sponsoring legislation to enforce it.
California’s tribal gaming operators have been among the most vocal opponents of prediction market expansion. California tribes spent over $600 million on a failed 2022 ballot initiative to legalise online sports betting under tribal control, and they view CFTC-regulated prediction markets as a federal end-run around that state-level process. Senator Schiff’s co-sponsorship of this bill directly reflects that constituency’s political and financial influence in California Democratic politics.
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Key Takeaways
- Republican Senator John Curtis (Utah) and Democrat Senator Adam Schiff (California) jointly introduced a bill in 2025 to ban sports-event contracts on CFTC-regulated prediction markets.
- Sports derivatives accounted for up to 80% of trading volume on some prediction market platforms during the 2024 NFL football season [1].
- Flutter Entertainment’s stock rose more than 5% and DraftKings gained nearly 2% in midday trading on the day the bill was announced [2].
- The bill targets CFTC-regulated platforms like Kalshi and Polymarket, not state-licensed sportsbooks like FanDuel or DraftKings.
- California tribal casino operators, who spent over $600 million on a 2022 ballot initiative, are among the strongest supporters of the legislation.
- Kalshi won a federal court ruling in 2024 allowing sports contracts under CFTC oversight; the Curtis-Schiff bill would override that ruling through statute.
- The bipartisan nature of the bill, combining anti-gaming (Utah) and tribal sovereignty (California) motivations, gives it stronger legislative prospects than a single-party effort.
Frequently Asked Questions
What are prediction markets and why are they controversial for sports betting?
Prediction markets are platforms where users trade contracts based on the outcome of future events, including sports games, elections, and economic data. They are controversial in sports betting because CFTC-regulated platforms like Kalshi can offer sports outcome contracts without holding a state gaming licence, giving them a regulatory and cost advantage over licensed sportsbooks like DraftKings and FanDuel. Critics argue this creates an uneven playing field and bypasses consumer protection requirements [1].
Will the Curtis-Schiff bill actually pass the Senate?
No outcome is guaranteed, but the bill’s bipartisan sponsorship significantly improves its prospects compared to a single-party effort. Senator Curtis brings Republican support rooted in Utah’s anti-gaming stance, while Senator Schiff brings Democratic support tied to California’s tribal casino interests. The American Gaming Association and tribal operators represent powerful lobbying forces aligned behind the bill, though prediction market companies and financial industry groups are expected to mount strong opposition [2].
How does the CFTC regulate prediction markets differently from state gaming commissions?
The CFTC regulates prediction markets as financial derivatives exchanges under the Commodity Exchange Act, which imposes requirements around financial reporting, market manipulation, and contract design but does not include the same consumer protection mandates as state gaming licences. State gaming commissions require age verification systems, problem gambling programmes, tax payments to state governments, and ongoing compliance audits. This regulatory gap is the central argument behind the Curtis-Schiff legislation [1].
Why did DraftKings and Flutter stocks go up when the bill was announced?
Investors interpreted the bill as reducing competitive pressure on licensed sportsbooks. If prediction market platforms like Kalshi can no longer offer sports contracts, DraftKings and FanDuel (owned by Flutter) would recapture users who had migrated to prediction markets for sports wagering. Flutter rose over 5% and DraftKings gained nearly 2% in midday trading on the announcement day, reflecting market expectations of improved competitive positioning for regulated operators [2].
The Bottom Line
The Curtis-Schiff bill represents the most serious legislative challenge prediction markets have faced since Kalshi’s 2024 court victory opened the door to sports contracts. The combination of a Utah Republican opposed to gambling on principle and a California Democrat backed by tribal casino money creates a coalition that is genuinely difficult for prediction market lobbyists to neutralise. Both motivations are deeply rooted in constituent interests, not political posturing.
For the broader sports betting industry, the bill’s introduction is already a win. The 5% jump in Flutter’s stock and the 2% gain for DraftKings on a single news day demonstrate how much market value prediction market competition had been suppressing. If the bill advances through committee, those gains could extend further as investors price in a more favourable competitive environment for licensed operators.
The prediction market sector built its sports business on a legal argument that regulators and courts found compelling in 2024. Congress can rewrite those rules entirely, and with bipartisan momentum now behind the effort, the window for prediction markets to operate in sports may be closing faster than anyone in that industry anticipated. The smartest money, it turns out, is now on the regulated sportsbooks.
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Sources
- Casino.org – Reporting on prediction market sports contract volumes reaching up to 80% of platform trading during NFL season and the Curtis-Schiff bill introduction.
- Gambling News – Data on Flutter and DraftKings stock movements following the bill announcement and prediction market industry growth figures from 2022 to 2024.
