U.S. prediction markets face a legislative crackdown, as multiple bills are set to ban election and sensitive event contracts

Gate News message: On March 31, the U.S. prediction markets industry is seeing a dual situation of rapid expansion and legislative crackdowns. Data shows that the industry’s monthly trading volume grew from $1.2 billion at the start of 2025 to more than $20 billion a year later. Political contracts and sports contracts are the main trading categories. But the industry is also facing pressure from more than six legislative proposals in Congress, mostly pushed by Democratic lawmakers, with some receiving support from both parties.

These bills cover multiple directions: STOP Corrupt Bets Act would comprehensively ban contracts related to elections, government actions, sports, and military operations; Public Integrity in Financial Prediction Markets Act would prohibit government employees from betting using material nonpublic information, with coverage including the president, vice president, cabinet members, and members of Congress; BETS OFF Act targets trades involving sensitive events such as war, terrorism, and assassination; Prediction Markets Are Gambling Act, meanwhile, supports states in bringing sports event contracts under gambling regulation.

Several states have sued Kalshi. A Nevada court has paused Kalshi’s operations in that state, and Arizona’s attorney general has brought 20 criminal charges against Kalshi. CFTC Chair Mike Selig argues that the federal government should have exclusive jurisdiction over prediction markets, and his agency is pushing forward the formal rulemaking process for regulation.

TRM Labs analysis shows that, in prediction contracts related to prior U.S. military actions against Iran, four wallets that previously had almost no trading records made profits of $872,000 by placing bets of about $40,000, sparking allegations of insider trading. Currently on Polymarket, the probability that Democrats regain the House is 85%. If Democrats win the midterm elections in 2026, the push behind the above-mentioned legislation may further intensify.