Senate Commerce Committee Examines Prediction Markets at Hearing

U.S. Senate Commerce Committee held a hearing on Wednesday to examine the prediction markets sector, which allows users to bet on outcomes of events including sports and politics. Committee Chairman Ted Cruz said high-profile incidents of player cheating have occurred in several professional leagues.

He cited cases involving NBA players and coaches accused of manipulating performance, two major league baseball pitchers allegedly rigging pitches, Major League Soccer players banned for intentionally receiving yellow cards, and UFC matches canceled due to suspected match fixing.

Senator John Hickenlooper raised concerns about marketing practices that could reach individuals under 18. Patrick McHenry, now an adviser at the Coalition for Prediction Markets, stated that trades are not allowed for anyone under 18 and that the average user age is 33.

Levant, director of gambling policy at the Public Health Advocacy Institute, testified that prediction market advertising constitutes an "avalanche of unregulated advertising" and described the product as addictive. Tarek Mansour, co-founder and CEO of Kalshi, posted on X this week that the company committed $2 million to the National Council on Problem Gambling for trader health and safety initiatives.

The Commodity Futures Trading Commission filed a lawsuit on Tuesday against a new Minnesota law that would classify prediction market activity as illegal. CFTC Chairman Mike Selig stated the law would turn lawful operators into felons overnight. Bill Miller, president and CEO of the American Gaming Association, argued that federal regulators lack competence to oversee the sector and that it harms tribes and states financially.

Cruz said the Supreme Court may decide the regulatory question.