Gaming Associations Urge Congress to Restrict Prediction Market Event Contracts

Gaming associations have called on Congress to restrict prediction market event contracts as of mid-May 2026, and they frame these products as a form of unregulated gambling that competes directly with licensed sportsbooks. This development arrives amid ongoing debates over the rapid growth of platforms like Polymarket and Kalshi in the U.S. betting landscape, where the push highlights tensions between traditional gaming operators and emerging prediction market players.

The Associations' Position on Event Contracts

Representatives from major gaming groups presented their case to lawmakers in Washington, and they emphasized that event contracts allow users to wager on outcomes ranging from election results to entertainment events without the oversight that applies to state-licensed sportsbooks. Data from industry reports shows these platforms have seen user volumes increase substantially since 2024, while licensed operators must comply with age verification, tax reporting, and consumer protection standards set by state regulators. Observers note that the associations argue this disparity creates an uneven playing field, and they have requested specific legislative language that would limit the types of contracts available on prediction market sites.

Understanding the Rise of Polymarket and Kalshi

Polymarket and Kalshi operate under different regulatory frameworks than traditional sportsbooks, because their contracts often fall under the jurisdiction of the Commodity Futures Trading Commission rather than state gaming commissions. Researchers at academic institutions have documented how these platforms use blockchain technology and centralized order books to facilitate trades on binary outcomes, and figures from platform disclosures indicate millions of dollars in trading volume during high-profile events in 2025. Those who've studied this segment explain that event contracts differ from standard sports wagers in structure yet produce similar user experiences, which leads gaming associations to view them as direct competitors in the broader betting ecosystem.

But here's the thing, the timing of this call coincides with several state-level reviews of gambling expansion, and lawmakers have received letters from multiple associations outlining concerns over consumer safeguards. Evidence from regulatory filings reveals that prediction market activity has expanded beyond political events into areas such as weather outcomes and corporate announcements, whereas licensed sportsbooks remain focused on athletic competitions and related propositions.

Regulatory Context and Market Dynamics

According to statements from industry organizations, the Commodity Futures Trading Commission has approved certain event contracts in recent years, yet gaming associations contend that these approvals occurred without sufficient coordination with state gaming authorities. Studies from research institutions indicate that prediction markets can influence public perception of event probabilities, and this effect becomes pronounced during election cycles when trading volumes spike. People who track betting trends have observed that the two segments sometimes overlap in user bases, even though the products target slightly different audiences.

What's interesting is how the debate has drawn in perspectives from various stakeholders, including some academic economists who note the informational value of prediction markets while others highlight risks associated with unregulated access. Data shows that licensed sportsbooks in multiple states generated substantial handles throughout 2025, and associations use these figures to argue that additional competition from prediction platforms could pressure revenue streams that fund state programs. The reality is that Congress now faces requests to clarify jurisdictional boundaries between federal derivatives oversight and state gambling regulation, and any legislative response would likely address both product classification and operator responsibilities.

Potential Pathways for Legislative Action

Lawmakers have begun reviewing draft proposals that would impose restrictions on the scope of event contracts, and these measures range from outright prohibitions on certain categories to requirements that prediction platforms obtain state licenses similar to those held by sportsbooks. Industry reports compiled by trade groups reveal that operators in states with mature sports betting markets have expressed support for the associations' stance, because they see overlapping product features that blur lines between licensed and unlicensed offerings. Those who've examined comparable regulatory shifts in other jurisdictions note that clear definitions often determine whether emerging platforms integrate into existing frameworks or face separate treatment.

Researchers continue to analyze user data from both prediction markets and sportsbooks, and preliminary findings suggest that some participants engage with multiple platforms simultaneously. This pattern leads associations to maintain that coordinated federal action would help standardize consumer protections across the betting sector. Figures from mid-May 2026 indicate that the discussions remain in early stages, with no final bills introduced yet, although committee hearings have been scheduled to gather additional testimony.

Conclusion

The call from gaming associations to restrict prediction market event contracts reflects broader questions about how different forms of wagering fit within the U.S. regulatory structure. As platforms like Polymarket and Kalshi continue to expand their offerings, Congress will weigh arguments from traditional operators alongside input from regulators and market participants. The outcome of these deliberations will shape the competitive landscape for years ahead, and stakeholders on all sides are monitoring developments closely.