Let’s start here, somewhere we can all probably agree: No one knows what’s going to happen with prediction markets, specifically contracts tied to sports. If you claim to know, you’re either a fool or a liar.
The prevailing wisdom is that this ends up in front of the Supreme Court, and whatever happens there happens there.
As for the 10 or so congressional bills floating around? You know, the PREDICT Act, the Public Integrity in Financial Prediction Markets Act, the End Prediction Market Corruption Act, the Prediction Markets Security and Integrity Act, the Prediction Markets Are Gambling Act, the DEATH BETS Act, the BETS OFF Act, the Event Contract Enforcement Act, and the Stop Corrupt Bets Act? What about them?
The prevailing wisdom is that these are all mostly performative, have no chance of passing, and certainly have no chance of being signed into law by the current occupant of 1600 Pennsylvania Ave.
And that’s probably true. Well, it’s 90% true, according to traders on Polymarket.
But what if — flight of fancy incoming — the Democrats take the House and possibly the Senate in the 2026 midterms, non-MAGA congressional Republicans break away from the president, a little bit of a “power to the people, not quite Marie Antoinette levels, but you know, even the upper middle class has had enough of real or perceived cronyism” breaks out, there’s continued anti-gambling sentiment in the media, a 2028 election yields a president who doesn’t have sons tied to Kalshi and Polymarket, and the Supreme Court decides — much like it did the first time New Jersey brought PASPA to its attention — to deny a petition to hear a prediction market case?
All of a sudden we go from squinting to see this to, well golly, I guess that’s a path no one is really talking about.
So I’m going to talk about it.
Little history
Let’s start with 2006.
The Unlawful Internet Gambling Enforcement Act, UIGEA to its friends and enemies, is the law that destroyed online poker in America. (Well, it was, specifically, “No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful Internet gambling.”) It’s the reason Black Friday happened in 2011. And here’s how it became law: It was added late to the conference report of the SAFE Port Act. A port security bill. You know, maritime transportation. The House and Senate agreed to the conference report on Sept. 29, 2006. President George W. Bush signed it on Oct. 13. And that’s how the widespread online poker industry died in America.
I’m not saying the exact same thing happens to prediction markets, but I am saying Washington has a long and storied history of doing things nobody saw coming, on a timeline nobody saw coming, attached to bills wholly unrelated to the issue coming along for the ride. And if you think something similar can’t happen to prediction markets, given the right political winds, I’d gently suggest you go back and read the history. Replace “unlawful internet gambling” with “prediction markets.” Likely? No. But not impossible.
Up for grabs
“We see a lot of overconfidence in forecasting the regulatory path for U.S. prediction markets over the next 36 months,” said Lloyd Danzig, managing partner at Sharp Alpha. “Perhaps there is an irony to the unpredictability of the prediction markets sector. The combination of a unique political backdrop at the federal level, an active congressional election in 2026, and a presidential race in 2028 creates too many volatile moving parts to model reliably. Anyone saying they know exactly how this all resolves is overestimating their visibility.”
Translation: ¯\(ツ)/¯
Peter Hammon, an attorney and advisor in the online gaming and sports betting space, puts it more concretely. He thinks the chances of Congress acting have “gone from zero to 5-10% due to the relative chaos and PR campaign failures of PMs in the last six months.”
Five to 10% is not a lot. But zero is less.
As for timing, Hammon doesn’t expect Congress to jump before the Supreme Court rules.
“I suspect it makes sense for all parties to have a ruling first and then maybe some congressional action to clean up anything that the Supreme Court doesn’t address,” he said.
If the Supreme Court hears a prediction markets case, the justices will most likely be interpreting the Commodity Exchange Act. The CEA is what gives the CFTC its authority. Congress wrote the CEA, and Congress can rewrite it.
In this scenario, this is a statutory fight. If SCOTUS says, “Under the current CEA, Kalshi is allowed to offer sports contracts,” Congress can respond by amending the CEA to say, “No, it isn’t.” It’s a statute. Congress can change it.
That usually means 60 votes in the Senate to get past a filibuster. That’s a tall order in a polarized Congress. But it’s not impossible, especially if you consider a handful of Senate Republicans have introduced legislation themselves to either bar sports event contracts or take other, less drastic measures tied to prediction markets.
Political breeze
Now let’s pretend the flight of fancy actually happens. Dems take the House. Maybe the Senate. What changes?
A lot, actually and potentially, even short of new legislation.
Oversight hearings get nasty. Expect CFTC officials to get dragged to Capitol Hill and asked, under oath, about every headline from the last two years. Sports event contracts. The assassination markets. The Iran war contracts that got White House staff warned off. Insider trading concerns. The Trump family’s role.
And then there are the cruder levers Congress has even without a filibuster-proof majority.
Appropriations is one. Congress controls CFTC funding. Buried in a spending bill, you can attach language saying the CFTC can’t spend money regulating certain kinds of event contracts. It’s ugly, only lasts for the budget cycle, but it’s out there.
The Congressional Review Act is another. The CFTC withdrew its earlier event contract proposal in February and issued an advance notice of proposed rulemaking on prediction markets in March, with comments due April 30. If the CFTC eventually finalizes a rule, Congress can pass a simple-majority resolution killing it. The president can (and almost certainly would) veto, yes. But again, flight of fancy. The political environment in 2027 or 2028 may not look like the political environment today.
Here’s something else that gets lost in the D.C. noise: All of this is getting fought at the state level, and there is no sign of that slowing down.
Maryland has issued cease-and-desist letters. Massachusetts got an injunction. Nevada has sued. New Jersey is in the middle of the most closely watched case. And in the opposite direction, the CFTC itself is now suing Arizona, Connecticut, and Illinois. Kalshi has lawsuits against states dotting the landscape.
And opposition at the state level has been notably bipartisan. Republican and Democratic attorneys general are working on the same side of this. Republican gaming regulators and Democratic gaming regulators are simpatico. The partisan noise is largely a D.C. thing. Once you get past that, the underlying concern from these quarters is the same, namely — their thoughts — these platforms are offering sports betting without a proper license, and without the consumer protections everyone else has to follow.
And the states have receipts. We’re talking about very large recurring tax streams that states are not going to give up without a fight. You think New York legislators are just going to say buh-bye to the $1.3 billion in tax money from the sports betting operators? The money matters. So does the federalism precedent. If the federal government can use the CFTC to override state gambling authority, what else can it override?
That state-level coalition is the thing that makes me think congressional action isn’t quite as wild as the conventional wisdom suggests. When states line up across party lines, that has a way of filtering up.
Well enough alone
But here’s a counter-argument, and it’s Hammon’s, and it’s worth hearing: No one actually wants to mess too much with the status quo.
“Tinfoil hat opinion,” he told me. “The current situation works for all stakeholders, even though they won’t admit it.”
His breakdown: Congress has an easy target, and Democrats have an easy anti-Trump talking point. Tribes have something to coalesce around post-sweepstakes, and it turns the California sports betting fight into a good-vs.-evil campaign. Prediction markets run as far as they can while engaging in legal combat with the CFTC fighting on their side while building brand awareness and player databases. Sportsbooks have an off-ramp in case sports betting states get too frisky with increased taxes and regulation, which gives them some leverage.
“And consultants and lawyers like me love the chaos,” he noted.
I love that last line. Props to Hammon for stating what we all know.
And … I think Hammon’s broader point is at least directionally right. Obviously, not everyone in this ecosystem wants delay. Many sportsbooks and state regulators would happily crush this tomorrow. But enough powerful stakeholders can live with delay that delay becomes the default.
Congress can posture, courts can move slowly, prediction markets get another month of market share, user acquisition, and normalization. Some sportsbooks get to keep prediction markets in their back pocket in case the regulated market keeps getting squeezed.
Every month that passes, prediction markets dig in deeper. Every month they look a little more normal: more league deals, more media oxygen, more familiarity.
And if they look normal for long enough, even a loss in court is survivable. You show up at the negotiating table and say: “Look, we’re an established industry now. We employ people. We pay taxes. We have users and trading volume. You can regulate us, but you can’t uninvent us.”
That’s the play. The people pushing for congressional action know it. Which is also why, if they’re going to move, they have a window, and that window is not infinite.
So what happens? Who knows. I started this column saying I don’t know and anyone claiming to know is a fool or a liar, and I’m going to end it the same way.
But if you’ve read this far and you’re still in the “Congress will definitely not act” camp, I’d just point you back to UIGEA. Added late to the conference report of a port security bill. Online poker, dead.
Stranger things have happened. Specifically, that.
Flight of fancy? Maybe. But maybe not.
