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- A U.S. Senator has warned that prediction markets may be outpacing federal regulatory oversight.
- He argued the CFTC lacks resources to manage rapid growth and raised concerns about state gambling laws being bypassed
- Kalshi defended prediction markets as regulated financial tools.
Sen. Adam Schiff is raising fresh concerns about the rapid growth of federally regulated prediction markets, warning that they are beginning to look and function like unregulated sports gambling while outpacing the ability of federal agencies to properly oversee them.
“It Doesn’t Seem Very Complicated”
Speaking at a Brookings Institution event in Washington, Schiff argued that the line between financial event contracts and traditional betting has become increasingly difficult to distinguish.
He pointed specifically to markets tied to sports outcomes, saying the structure raises fundamental questions about whether these products are effectively just another form of wagering.
Schiff recalling an earlier Senate discussions on the issue,
If I bet on the Bills game using a prediction market, is that a sports bet?. It doesn’t seem very complicated to me.
Schiff, who serves on the Senate Agriculture Committee overseeing the Commodity Futures Trading Commission, said the agency is under strain and lacks the staffing and infrastructure needed to regulate a fast-expanding market.
He went on to say that the commission is currently operating with reduced personnel at a time when trading volume in event-based contracts continues to rise.
A Matter of State Authority
The senator also framed the issue as one of state authority, arguing that prediction markets tied to sports outcomes risk undermining individual state gambling laws.
He pointed to states such as California and Texas that have not legalized sports betting, suggesting that federally regulated platforms may be effectively bypassing those restrictions.
Schiff has co-sponsored bipartisan legislation “The Prediction Markets Are Gambling Act” with Senator John Curtis that would restrict sports-related prediction markets while preserving other types of contracts tied to commodities and financial hedging. He said the goal is to return authority over gambling-style products to state and tribal governments.
He also cited data suggesting that a small number of users account for a large share of profits in these markets, while most retail participants lose money, while raising additional concerns about age accessibility.
Representatives from Kalshi, one of the leading federally regulated prediction markets, pushed back on the criticism during the same event. A company executive argued that CFTC oversight provides greater transparency than fragmented state-level gaming regulations and rejected comparisons to casino gambling.
Kalshi officials also said prediction markets serve legitimate financial purposes, including hedging real world risks, and should not be confused with traditional betting platforms.
