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Senate Cracks Down on Prediction Markets in Bipartisan Sports Betting Hearing

Senators from both parties scrutinized Kalshi, Crypto.com, and major sportsbooks in a Wednesday hearing on sports integrity, signaling a possible federal showdown over CFTC oversight and state gambling laws.

Category: iGaming News - USA · By Growl Games Editorial Team · Thu May 21 2026 · Updated Thu Jul 23 2026

Senate Cracks Down on Prediction Markets in Bipartisan Sports Betting Hearing

Table of Contents

1. Hearing Overview

The U.S. Senate Commerce Subcommittee on Consumer Protection, Technology, and Data Privacy convened a two-hour hearing on Wednesday, May 20, 2026, titled “No Sure Bets: Protecting Sports Integrity in America.” Chaired by Sen. Marsha Blackburn (R-Tenn.) with participation from full committee chair Sen. Ted Cruz (R-Texas), the session examined the rapid expansion of online sports betting and the explosive growth of prediction markets such as Kalshi, Crypto.com, Polymarket, and Robinhood.

Witnesses included Bill Miller, President and CEO of the American Gaming Association (AGA); Mary Beth Thomas of the Tennessee Sports Wagering Council; Scott Sadin of Integrity Compliance 360; Patrick McHenry, senior adviser to the Coalition for Prediction Markets; and Harry Levant, gambling policy director at the Public Health Advocacy Institute.

2. Prediction Markets Under Fire

Lawmakers from both parties pressed witnesses on whether event contracts on prediction markets are functionally identical to traditional sports betting. The platforms operate under the federal Commodity Futures Trading Commission (CFTC) as designated contract markets, bypassing the state-level licensing regime that governs sportsbooks.

Sen. John Hickenlooper (D-Colo.) and Bill Miller both argued the CFTC is not competent to regulate sports wagering. McHenry pushed back, comparing event contracts to grain futures and stating that member companies maintain “enhanced surveillance greater than any casino and greater than any sportsbook in the country.”

Advertising practices drew sharp criticism, with senators flagging social media campaigns potentially reaching minors. Sportsbooks require a minimum age of 21, while prediction markets allow users 18 and older; McHenry stated the average user age is 33.

3. Sports Integrity Scandals Cited

Cruz cited a string of recent scandals to justify the hearing: NBA players and coaches accused of manipulating performance, two MLB pitchers allegedly rigging pitches for bribes, and UFC fight cancellations tied to suspected match-fixing. Since the Supreme Court’s 2018 PASPA ruling, legal sports betting has grown into a $165 billion market across 39 states and Washington, D.C.

Levant, a recovering gambling addict, told the panel that prediction-market advertising amounts to an “avalanche of unregulated advertising” and compared the product to heroin in its addictive potential.

The hearing landed days after Minnesota became the first state to ban prediction markets outright, with more than a dozen states introducing similar legislation according to the National Conference of State Legislatures. The CFTC has filed suit against New Jersey, Arizona, Connecticut, and Illinois, arguing federal preemption under the Commodity Exchange Act.

In April 2026, the U.S. Court of Appeals for the 3rd Circuit enjoined New Jersey from enforcing gaming laws against Kalshi, finding the platform had a “reasonable chance of success” on preemption grounds. Earlier this week, Philadelphia-based exchange Sporttrade announced it will shut its US sportsbook operations on May 25, pivoting to pursue a CFTC designation of its own.

5. What It Means for the Industry

The hearing crystallized a market-defining clash: Kalshi processed $23.8 billion in 2025 notional volume (up over 1,100% year-over-year), while FanDuel parent Flutter Entertainment shares are down nearly 60% over the past year and DraftKings (NASDAQ: DKNG) shares have dropped 30%over the same window. Both sportsbook giants have launched in-house prediction products — FanDuel Predicts and DraftKings’ equivalent — to defend market share. Kalshi also disclosed a $2 million commitment to the National Council on Problem Gambling ahead of the hearing.

Cruz signaled the dispute may not be resolved by lawmakers: “unless Congress acts, the Supreme Court may have to decide the issue.”

6. Closing Quote

“We want athletes competing on merit, but the opportunity to make money can tempt gamblers — and sometimes even athletes themselves — to guarantee a sure bet.”
— Sen. Ted Cruz (R-Texas), Chairman, Senate Commerce Committee, May 20, 2026

7. Sources

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