Shares of DraftKings (DKNG) surged approximately 8% during premarket hours Monday following a Wall Street Journal report revealing that a bipartisan coalition of U.S. senators plans to unveil legislation banning prediction market platforms from facilitating sports betting contracts.
The development represented positive momentum for conventional sports betting companies, which have faced ongoing competition from platforms like Kalshi and Polymarket vying for the same sports gambling audience.
The draft legislation would prohibit entities under Commodity Futures Trading Commission (CFTC) oversight from listing contracts connected to athletic competitions. This would have a direct effect on Kalshi and Polymarket’s domestic operations — two prominent players in the prediction market space.
The proposal would further prohibit casino-style entertainment offerings on these platforms, encompassing slot machines, video poker, blackjack, and bingo games.
Sen. Adam Schiff (D., Calif.) stated that the CFTC is “greenlighting these markets and even promoting their growth,” further noting that “it’s time for Congress to step in and eliminate this backdoor which violates state consumer protections, intrudes upon tribal sovereignty and offers no public revenue.”
Joint sponsor Sen. John Curtis (R., Utah) described the matter as particularly relevant to his constituency. “Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators,” he stated.
This represents the inaugural bipartisan Senate measure focused on prediction market oversight — a significant development in the escalating conflict between state authorities, federal agencies, and the platforms in question.
Flutter Entertainment (FLUT), parent company of FanDuel, similarly experienced an approximate 8% premarket increase following the announcement, as the legislation would eliminate a significant competitive challenge to its primary operations.
The congressional initiative arrives amid existing state-level actions against Kalshi. Nevada obtained a temporary restraining order preventing Kalshi from providing contracts related to sports, elections, and entertainment events.
Arizona escalated matters by filing criminal charges against Kalshi’s parent entities for purportedly conducting an unlicensed illegal gambling operation — though Kalshi has contested these allegations and called on the state to dismiss the charges.
Massachusetts and Michigan have both initiated lawsuits against Kalshi, contending that its prediction markets constitute unauthorized sports gambling activities. Polymarket has similarly filed suit against Michigan seeking to block enforcement of state gambling regulations against its platform.
On the federal front, the CFTC has asserted it possesses exclusive authority over commodities derivatives, including event-based contracts. In February, the agency submitted a brief to the Ninth Circuit defending this jurisdictional position.
Most prominent U.S. sports organizations have generally favored legalized sports wagering. However, their stance on prediction markets has been more nuanced — reflecting apprehensions about competition integrity and potential misuse of inside information.
Nevertheless, Major League Baseball recently entered into a licensing agreement with Polymarket, providing the platform access to league information while establishing collaborative monitoring of baseball-related wagers on the service.
DraftKings had not issued any official response regarding the proposed legislation as of Monday morning.
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