Republican senators took a tougher line on prediction markets during a Senate Commerce subcommittee hearing on sports betting and sports integrity. The hearing, titled “No Sure Bets: Protecting Sports Integrity in America,” raised questions over whether platforms such as Kalshi and Polymarket are offering financial contracts or sports betting by another name.
The hearing took a different tone from recent House discussions, where some Republicans have been more open to the industry’s argument that event contracts belong under federal commodities rules. In the Senate hearing, GOP members focused on state gambling laws, consumer safeguards and the risk of sports markets being used to bypass betting regulation.
Cruz questions CFTC role
Sen. Ted Cruz, who chairs the full Commerce Committee, pointed to disagreement over whether the Commodity Futures Trading Commission can allow sports event contracts under the Commodity Exchange Act. Cruz noted that many people see prediction markets as a workaround to state gambling laws.
That concern challenges the industry’s central defence. Kalshi and other federally regulated platforms argue that their contracts are derivatives, while state regulators and sportsbooks argue that sports contracts look and function like betting products.
Sen. John Curtis also questioned the distinction between prediction markets and sportsbooks. The explanation would be difficult to defend to voters in Utah, where gambling restrictions remain tight.
McHenry defends the industry
Patrick McHenry, a former House Financial Services Committee chair and senior adviser to the Coalition for Prediction Markets, defended the sector during the hearing. He argued that prediction markets are different from sportsbooks because they operate as financial exchanges regulated by the CFTC.
The response did not end the debate. Senators from both parties pressed on whether the CFTC has enough experience with sports integrity, advertising risks, insider information and harm prevention. The American Gaming Association also used the hearing to attack the current structure. AGA president Bill Miller accused the CFTC of allowing unregulated gambling to expand through sports event contracts.
Sports integrity concerns stay central
The hearing also covered athlete inside information, advertising to young users and gambling addiction risks. Those issues have become more urgent as sports betting and prediction markets both move deeper into mainstream sports coverage.
Dr. Harry Levant, a gambling addiction expert, called for minimum federal safety standards for sports betting. He also raised concern about prediction markets reaching vulnerable users, especially if platforms offer sports-related contracts without the same safeguards required of licensed sportsbooks.
