{"id":58,"date":"2026-05-24T22:40:49","date_gmt":"2026-05-24T22:40:49","guid":{"rendered":"https:\/\/americanindustryreview.com\/?p=58"},"modified":"2026-05-24T22:40:49","modified_gmt":"2026-05-24T22:40:49","slug":"tensions-over-prediction-markets-dominate-senate-hearing","status":"publish","type":"post","link":"https:\/\/americanindustryreview.com\/?p=58","title":{"rendered":"Tensions over prediction markets dominate Senate hearing"},"content":{"rendered":"
\n

Senators at a Commerce Committee panel hearing aired concerns Wednesday about rapidly growing prediction markets, appearing largely unswayed by industry arguments that they are not a form of betting subject to state regulation.\u00a0<\/p>\n

Read more House passes housing bill still at odds with Senate version<\/a><\/p>\n

Members of the committee\u2019s\u00a0Consumer Protection, Technology and Data Privacy Subcommittee were in agreement at a hearing that sports \u201cevent contracts\u201d on prediction markets bear a strong resemblance to traditional sports betting. They also shared worries about all forms of betting affecting the integrity of sports.<\/p>\n

The subcommittee heard from representatives of the sports betting and prediction market industries, as well as stakeholders focused on sports integrity, gambling regulation and gambling addiction.<\/p>\n

Subcommittee Chair Marsha Blackburn, R-Tenn., expressed her concern about betting\u2019s impact on the integrity of sports, as well as potential additional risks presented by prediction markets.<\/p>\n

\u201cWhile prediction markets represent financial innovation across many sectors, there are real concerns that they function much like traditional sports betting without the enforcement of state regulators and attorneys general,\u201d Blackburn said.<\/p>\n

Later, Blackburn, who is running for governor in Tennessee, said that witness testimony could inform potential regulation by the committee, \u201cand also looking at the division of what should be federal and what should be state and preserving those states\u2019 rights.\u201d<\/p>\n

The prediction market industry says its platforms are more similar to trading in agricultural futures than traditional casino betting and are therefore under the jurisdiction of the federal Commodity Futures Trading Commission, rather than state gaming regulators.<\/p>\n

Former Rep. Patrick T. McHenry, R-N.C., now a senior adviser for the industry group Coalition for Prediction Markets\u00a0\u2014\u00a0which is led by fellow former Rep. Sean Patrick Maloney, D-N.Y.\u00a0\u2014\u00a0told the committee that the business models are \u201cfundamentally different products.\u201d<\/p>\n

\u201cIn a casino or sportsbook, the house sets odds and profits when customers lose. In a prediction market exchange, participants trade with one another while the platform earns transaction fees for facilitating the market,\u201d McHenry said.<\/p>\n

But Bill Miller, president and CEO of the American Gaming Association, was critical of prediction markets.\u00a0<\/p>\n

\u201cWe\u2019re part of the entertainment economy. These so-called prediction markets are deceptively calling sports betting \u2018financial contracts\u2019 and \u2018investment.\u2019 Despite messaging designed to beguile policymakers and the public, they are increasingly being exposed as backdoor sports betting operations,\u201d he said.<\/p>\n

Sen. Ted Cruz, R-Texas, who chairs the full Commerce Committee, pointed to discord over the federal government\u2019s role.<\/p>\n

\u201cThere is serious disagreement about whether the CFTC can unilaterally allow prediction markets to offer sports event contracts pursuant to the Commodity Exchange Act,\u201d Cruz said. \u201cMany simply see prediction markets as a workaround to state gambling laws.\u201d<\/p>\n

Sen. John Curtis, R-Utah, said that McHenry\u2019s explanation of the difference between prediction markets and sportsbooks wouldn\u2019t pass muster at a Utah town hall.<\/p>\n

\u201cThey\u2019re going to say to me, tell me how that is not gambling. It seems to meet every definition of gambling,\u201d he said.<\/p>\n

The CFTC contends that \u201cevent contracts\u201d offered by prediction markets are a form of derivative and therefore fall under the commission\u2019s jurisdiction.<\/p>\n

The panel\u2019s ranking member, Sen. John Hickenlooper, D-Colo., opposed allowing the commission to regulate sports betting on prediction markets.<\/p>\n

Read more No, it\u2019s not an anti-incumbent election, Volume 4<\/a><\/p>\n

\u201cThe CFTC has literally no experience in regulating sports betting. Even worse, CFTC has failed to use the authority it does have to protect sports betting from insider trading, market manipulation, predatory advertising and financial stability.\u201d<\/p>\n

CFTC actions<\/h2>\n

President Donald Trump and his family have a personal interest in prediction market regulation. Truth Social, a platform owned by Trump Media and Technology Group, has said that it will expand into prediction markets, though in its latest quarterly filing it said that at launch, Truth Predict \u201cwill primarily entail marketing and promotion collaboration with OG.com \u2014 a new prediction market experience announced by Crypto.com in February 2026.\u201d<\/p>\n

Both Curtis and Hickenlooper are in favor of legislation to regulate prediction markets.<\/p>\n

Curtis is a co-sponsor of a bill led by Sen. Adam B. Schiff, D-Calif., that would prohibit companies registered with the CFTC from offering sports betting or casino-style games.<\/p>\n

In March, Hickenlooper co-sponsored a bill by Sen. Christopher S. Murphy, D-Conn., that would prohibit wagering on acts of terrorism, assassinations, wars, government actions or actions a person can control or know the outcome of in advance. Rep. Greg Casar, D-Texas, introduced companion legislation in the House.<\/p>\n

The CFTC has exercised what it says is its jurisdiction over prediction markets by suing states that attempt to regulate the industry.<\/p>\n

On Monday, Democratic Minnesota Gov. Tim Walz signed into law a measure to ban prediction markets in the state starting on Aug.\u00a01, 2026. The CFTC then sued to block the law.<\/p>\n

The CFTC has also sued Arizona, Connecticut and Illinois to prevent them from enforcing state criminal laws against prediction markets, arguing that the laws are preempted by the CFTC\u2019s enforcement of federal laws around derivatives.<\/p>\n

In April, the U.S. Court of Appeals for the 3rd Circuit\u00a0 New Jersey\u2019s enforcement of its gaming laws against prediction market Kalshi, noting the court\u2019s opinion that the platform has a \u201creasonable chance of success\u201d in arguing that state laws are preempted by the Commodity Exchange Act.<\/p>\n

Cruz noted recent court decisions and said that \u201cunless Congress acts, the Supreme Court may have to decide the issue.\u201d\u00a0<\/p>\n

Kids safety<\/h2>\n

The hearing also covered concerns that sports betting can threaten the integrity of game outcomes or encourage athletes to take particular actions.<\/p>\n

Much of the discussion centered on micro prop bets, which allow for wagers on actions as small as whether a pitcher throws a ball or a strike. Witnesses told the committee those types of bets are easier for a single player to manipulate the outcome of and that they can also be particularly addictive.<\/p>\n

Blackburn questioned why sportsbooks and markets who say they don\u2019t advertise to kids continue to advertise on social media, where she said algorithms mean the companies can\u2019t guarantee their ads won\u2019t be shown to minors.<\/p>\n

\u201cAmericans, including young people, are being inundated with advertisements on social media. Their favorite influencers and sports figures are introducing minors to betting,\u201d Blackburn said, going on to highlight teenagers saying that gambling content was shown to them through social media algorithms. \u201c\u200b\u200bIt was served up to them. They didn\u2019t search for it. This is not safe. It needs to stop, and advertising to minors is disgusting.\u201d<\/p>\n

Hickenlooper called the onslaught of gambling marketing \u201cthe hounds of hell.\u201d<\/p>\n

\u201cTo let that untethered prey on our young people \u2014 I think it\u2019s unconscionable. I think it\u2019s irresponsible,\u201d Hickenlooper said.<\/p>\n

FiscalNote, the parent company of CQ and Roll Call, has announced a product expansion into political prediction markets.<\/p>\n

Read more \u2018Anti-weaponization fund\u2019 mobilizes resistance among Democrats<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Senators at a Commerce Committee panel hearing aired concerns Wednesday about rapidly growing prediction markets, appearing largely unswayed by industry arguments that they are not a form of betting subject to state regulation.  Members of the committee\u2019s Consumer Protection, Technology and Data Privacy Subcommittee were in agreement at a hearing that sports \u201cevent contracts\u201d on prediction […]<\/p>\n","protected":false},"author":1,"featured_media":57,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-58","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-congress"],"yoast_head":"\nTensions over prediction markets dominate Senate hearing - American Industry Review<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/americanindustryreview.com\/?p=58\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tensions over prediction markets dominate Senate hearing - 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