NEW YORK (AP) — Kalshi and Polymarket, two of the largest prediction market platforms, rushed to announce new industry guardrails on Monday after two key senators announced legislation that could seriously weaken the industry’s prospects.
Calshe said it would ban political candidates from making deals within their own campaigns and would preemptively prevent anyone involved in college or professional sports from trading contracts related to the sport in which they play or are employed.
Polymarket instituted a broader ban than Kalshi. Its rules now explicitly state that users cannot trade on contracts that may hold confidential information or that may influence the outcome of an event. This includes athletes, but may also include company officials, policymakers, or anyone with enough influence to influence the outcome of an event or to have advance information.
Polymarket, in particular, came under heavy criticism after some of its users placed large bets ahead of the Iran war and military action in Venezuela earlier this year. These users appear to have profited significantly from knowing in advance that President Donald Trump would take military action in these areas.
Sens. Adam Schiff, D-Calif., and John Curtis, R-Utah, introduced sweeping legislation on Monday that would ban prediction markets from setting up sports-related contracts. If enacted, the ban would eliminate much of Kalshi’s business model and have a significant impact on Polymarket’s business. While prediction markets allow users to bet on everything from weather to political events, much of its recent growth has come from sporting events.
Shares of the parent company of FanDuel and DraftKings surged on Monday after the senator made the announcement.
While Senators Schiff and Curtis are not the first politicians to propose a broad ban on prediction market activity, the fact that both political parties are skeptical of prediction market activity has alarmed the industry. Several states have preemptively banned Kalshi and Polymarket, saying the platforms are essentially a technologically distorted sports betting industry. Although Kalshi has tried to sue to get his platform into certain states like Nevada and Utah, it has had little success so far.
Kalshi and Polymarket are backed by the Trump-controlled Commodity Futures Trading Commission, the federal regulator of derivatives and other prediction market activity. CFTC Chairman Michael Selig said he would support Kalshi in any legal action at the state level and argued that federal law preempts any state law on the issue.
