Shares of DraftKings (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT) climbed about 7% Monday morning following reports that U.S. senators plan to propose bipartisan legislation aimed at blocking sports betting activity on prediction-market exchanges.
The draft legislation would bar entities overseen by the Commodity Futures Trading Commission from listing contracts tied to sporting events. The proposal specifically encompasses prediction-market platforms such as Kalshi and the U.S. platform operated by Polymarket.
In addition to sports-related contracts, the bill would seek to prevent these CFTC-regulated exchanges from offering casino-style games. The text of the proposal, as described in reporting, lists examples of games targeted for prohibition, including slot machines, video poker, blackjack and bingo.
Supporters of the measure framed the initiative as closing an apparent regulatory gap. Senator Adam Schiff of California argued that the CFTC is permitting these markets to develop and that congressional action is required to stop what he called a backdoor that undermines state consumer protections, intrudes upon tribal sovereignty and produces no public revenue.
The bill's co-sponsor, Senator John Curtis of Utah, emphasized concerns about exposure to betting among younger people in his state. He said that addictive sports betting and casino-style gaming contracts on prediction platforms should be regulated at the state level rather than by federal regulators.
The proposal marks the first bipartisan Senate effort specifically targeting the regulation of prediction markets, according to the reporting. Beyond the immediate market reaction in the shares of listed sports-betting companies, the measure draws attention to the jurisdictional fault lines between federal regulators and state-level oversight, including tribal authorities.
Takeaway
- Equities of major sports-betting operators reacted positively to the news of potential limits on prediction-market competition.
- The proposed ban would apply to CFTC-regulated platforms, with named examples including Kalshi and Polymarket's U.S. platform.
- Senators sponsoring the bill cited state consumer protections, tribal sovereignty and youth exposure as key motivators for federal legislative action.