Federal Congressmen in Nevada proposed a bill to ban sports contract trading at prediction markets such as Polymarket and Kalshi.
Reps. Steven Horsford (D-NV) and Mark Amodei (R-NV) told the Nevada Independent prior to its introduction on Thursday that they planned to present the bill, known as the Prediction Markets are Gambling Act —. If approved, prediction traders would be blocked from accessing sports markets that critics argue are inherently linked to sports betting, despite regulatory differences.
The federal proposal
Sports event contracts are not explicitly allowed by the Commodity Futures Trading Commission (CFTC), the federal body in charge of regulating prediction markets. But the CFTC also has not displayed any interest in banning sports markets.
A recent set of proposed rules sought to add sports to the list of officially approved markets, ending debates between state and federal officials.
Nevada’s Representatives don’t support the idea.
“When it looks like sports betting, it acts like sports betting, and profits from sports betting, then it should follow the same rules as every other sportsbook,” Horsford told The Nevada Independent in an interview. “Regardless of which app a consumer uses, they deserve the same protection, and that has been the gold standard of regulation that Nevada has been built on, and it's what we are working to ensure is protected.”
Banning sports markets would return the full power to legal sportsbooks, whose house-made odds differ from prediction markets’ peer-to-peer system. That’s especially important in Nevada, given its economy is largely powered by gambling and the related hospitality and tourism industries.
“This is about protecting jobs, protecting consumers, and protecting the integrity of our gaming industry,” Rep. Horsford said. “Nevada has always been the gold standard for gaming regulations. These companies are exploiting a federal loophole that allows them to effectively sidestep state oversight that every other legal sportsbook must follow.”
Sports dominate prediction markets
Prediction markets have been in the mainstream spotlight for less than one year. Many sports fans didn’t have a clue they could win or lose money by predicting various outcomes during the last NFL season.
Despite that, prediction operators generated more than $50 billion in notional trading volume during the FIFA World Cup in June. None of the revenue that was generated was paid in local taxes, since these platforms are only required to receive federal, not state, licensing.
“They've already cost states over $1 billion in lost gaming tax revenue money that should have gone toward funding schools, roads, and critical programs,” Horsford said. “That's why I introduced this bill to close the loophole, hold these companies to the same standard, and protect Nevadans.”
Prediction markets offer contracts in a plethora of non-sports industries, including entertainment, pop culture, economics, weather, and politics. However, an overwhelming majority of trades and notional trading volume is related to sports contracts, which often offer better deals without a house-imposed vig found in sportsbook odds.
The newly proposed act is the second to target sports contracts. Rep. Dina Titus (D-NV) also presented the Fair Markets and Sports Integrity Act, although that bill does not have a Republican co-sponsor.
The Event Contract Enforcement Act, sponsored by Rep. Blake Moore (D-UT) and Rep. Salud Carbajal (D-CA), would extend beyond sports, with a proposed ban on contracts related to elections, terrorism, war, and assassinations.
The Trade Handle Prediction Markets Take
State officials are at the mercy of the single-chair CFTC due to the Constitution’s supremacy clause. Enacting federal legislation to walk back the reaches of prediction markets is one of the few ways short of a Supreme Court ruling that sports contracts could be reduced or removed, although they won’t go down without a fight, given the money that is already at stake.