Senators are signaling an appetite for pursuing legislation that would create federal standards for prediction markets that allow people to place cheap bets on sports — and just about anything else.
“There’s interest from members on the panel to move forward and get something on the books,” said Sen. Marsha Blackburn (R-Tenn.) said Wednesday in an interview after she presided over a Senate Commerce subcommittee hearing on the topic.
She added she planned to confer with the full Commerce Committee chair, Sen. Ted Cruz (R-Texas), about a path forward.
The hearing, convened by the Subcommittee on Consumer Protection, was billed as a fact-gathering exercise on the risks associated with popular online platforms like Kalshi and Polymarket — especially among young people — as well as sports scandals related to match-fixing and insider trading.
It came as House lawmakers are beginning their own internal conversations about cracking down specifically on the ability of lawmakers, their spouses and dependent children to exploit their insider knowledge to game the system across prediction markets, according to three people granted anonymity to share direct knowledge of the conversations.
House Majority Leader Steve Scalise (R-La.) said Wednesday that House Administration Committee Chair Bryan Steil (R-Wis.) was “looking at” legislative options but details are still murky.
The Senate hearing revealed there could be strong industry pushback to efforts to regulate the prediction market space. For instance, Patrick McHenry — the former chair of the House Financial Services Committee who is now an adviser for the Coalition for Prediction Markets — argued prediction markets are already thoroughly regulated by the Commodity Futures Trading Commission.
He also defended platforms like Kalshi and Robinhood, likening them to commodities futures that allow people to hedge against uncertain actions: “When grain futures came to fruition over 100 years ago, it was viewed much the same,” he said.
McHenry said he welcomed Congress’ input, but in an interview after the hearing he stressed the need to educate lawmakers.
“Part of this is just exposure on what we are doing — how these things function, what are these things doing to protect consumers,” McHenry said, adding that technology has allowed the platforms to be more proactive to find and penalize bad actors. “There has not been a significant education campaign prior to this year,” he said.
But senators also heard from Bill Miller, CEO of the American Gambling Association, who argued prediction markets were skirting rigorous rules established for sports betting and costing local governments tax funding.
“What we’ve seen is basically this tsunami created by prediction markets in a completely unregulated manner,” Miller said. “Yes, they are absolutely not competent to handle this, and … they are absolutely hurting tribes and states.”
Cruz appeared somewhat sympathetic to the argument.
“There is serious disagreement about whether the CFTC can unilaterally allow prediction markets to offer sports events contracts pursuant to the Commodity Exchanges Act,” he said in opening remarks Wednesday. “Many simply see prediction markets as a work around to state gambling laws. The courts are split. Ultimately, unless Congress acts, the Supreme Court may have to decide the issue.”
Meredith Lee Hill contributed to this report.