NEW YORK (AP) 鈥� Kalshi and Polymarket, the two biggest prediction market platforms, rushed to institute new industry guardrails and add new surveillance tools on Monday after two key senators announced legislation that could severely curtail the industry鈥檚 prospects.
Kalshi said it would ban political candidates from trading on their own campaigns, and it would preemptively block anyone involved in college or professional sports from trading contracts related to the sports they play or are employed by.
In a statement, a Kalshi spokesperson said the company’s new features 鈥渇urther demonstrate our commitment to safe markets.鈥�
Polymarket also instituted its own set of bans and rules. The company rewrote its rules to say clearly that users cannot trade on contracts where they might possess confidential information or could influence the outcome of an event. This would include athletes but could also include company officials, policymakers or anyone who would have enough influence to affect the outcome of an event or know the information in advance.
鈥淭hese rule enhancements make our expectations abundantly clear for every participant across both platforms,” said Neal Kumar, Polymarket’s chief legal officer, in a statement.
Polymarket, in particular, has faced intense criticism after some of its users made substantial bets ahead of the war in Iran and the , earlier this year. Those users appeared to have profited handsomely from knowing in advance that President Donald Trump was going to take military action in those regions.
Sen. Adam Schiff, D-Calif., and Sen. John Curtis, R-Utah, introduced broad legislation called the 鈥淧rediction Markets are Gambling Act,鈥� on Monday that would ban prediction markets from creating contracts related to sports. While prediction markets allow users to bet on everything from the weather to political events, much of their recent growth has been in sporting events. The bill, if enacted, would substantially destroy much of Kalshi and Polymarket’s future business prospects. Both companies have signed business deals with several sports teams and leagues in order to bolster their credibility with sports fans.
Sen Curtis’ home state of Utah has been in trying to keep Kalshi and Polymarket out of its state. Gov. Spencer Cox recently signed legislation that would expand the state’s definition of gambling to include what are known as 鈥減rop bets.”
Shares of the parent company of FanDuel and DraftKings rose sharply on Monday after the senators鈥� announcement.
While Sen. Schiff and Sen. Curtis are not the first politicians to propose a broad ban on the activities of prediction markets, the fact that both political parties are becoming skeptical of them is a cause of alarm for the industry. Several states have preemptively banned Kalshi and Polymarket, saying that the platforms effectively are a sports betting industry with a technological twist. While Kalshi has tried to sue to get its platform allowed in certain states, like Nevada and Utah, it has found little success so far.
Kalshi and Polymarket have found backing from the Trump-controlled Commodity Futures Trading Commission, the federal regulator of derivatives and other prediction markets activities. The CFTC鈥檚 chairman, Michael Selig, has said he would in any of its legal battles at the state level, arguing that federal law preempts any state law on this issue.
Any friendly decision the CFTC makes on this industry could end up financially benefiting the president鈥檚 family as well. President Trump鈥檚 son, Donald Trump Jr., has invested in Polymarket through his venture capital firm and is a strategic adviser for Kalshi.
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