Prediction markets aren't just being debated in courtrooms anymore. They're now getting sustained attention on Capitol Hill, and lawmakers are signaling the conversation is only beginning. During a recent House subcommittee hearing, Rep. Dusty Johnson said Congress shouldn't sit on the sidelines while regulators and judges decide the industry's future.
That doesn't necessarily mean new legislation is around the corner. It does suggest prediction markets have reached a point where members of Congress believe they deserve a closer look, especially as questions continue to grow around sports event contracts and federal oversight.
Dusty Johnson Wants Congress Involved
Rep. Dusty Johnson, who chairs the House Subcommittee on Commodity Markets, Digital Assets and Rural Development, closed the hearing with a message that stood out from much of the discussion. Johnson said courts are already weighing major legal disputes and the Commodity Futures Trading Commission (CFTC) is actively shaping policy. Even so, he argued Congress has its own role to play.
Rather than leaving every decision to regulators or judges, Johnson said lawmakers have an obligation to determine whether additional clarity is needed. He also made it clear this won't be a one-time discussion. Johnson said the subcommittee plans to hold additional hearings as lawmakers continue examining prediction markets and where they fit within existing federal law.
A Debate With No Simple Answer
The hearing brought together legal experts, gaming industry representatives, and market integrity specialists, making it clear there is still little agreement on where prediction markets belong. Several witnesses argued the CFTC already has the authority it needs under the Commodity Exchange Act to regulate event contracts while allowing innovation to continue.
Others maintained that sports-related contracts should remain under existing state gaming laws instead of being treated as federally regulated financial products. One area where there was much more agreement involved market integrity. Witnesses repeatedly emphasized the importance of customer protections, surveillance, and ensuring markets remain free from manipulation as the industry continues expanding.
South Dakota is Watching Closely
The issue isn't just playing out in Washington. Earlier this year, prediction markets became part of South Dakota's legislative conversation as representatives from the Deadwood Gaming Association raised concerns about sports event contracts. They argued that platforms offering contracts tied to sporting events could allow activity outside the state's existing gaming framework, where sports-related activity is generally limited to Deadwood and subject to additional restrictions.
Those concerns mirror arguments being made in several other states as lawsuits involving Kalshi continue working their way through the courts. While each state has its own laws, many are asking similar questions about how prediction markets should be regulated.
The Trade Handle Prediction Markets Take
One thing feels increasingly obvious after this latest hearing. Prediction markets have reached the point where Congress no longer views them as a niche issue affecting only a handful of companies. The legal battles will continue, and the CFTC will almost certainly remain at the center of those disputes.
Still, Johnson's comments suggest lawmakers aren't content to simply wait for courts to settle everything. With additional hearings already planned, Congress appears ready to become a much bigger part of the prediction market conversation heading into the months ahead.