Congress Splits Over Prediction Markets as Competing Bills Frame the Sector as Either Finance or Gambling

Three live bills in the 119th Congress are pulling federal policy on prediction markets in opposite directions: one would create a dedicated regulatory framework, while two others would reclassify event contracts as gambling outright. The outcome will determine whether platforms such as Kalshi and Polymarket operate as financial exchanges or face state-level enforcement.

• Senate Bill 4469, the Prediction Market Act of 2026, was referred to the Senate Committee on Agriculture, Nutrition, and Forestry on 30 April 2026, proposing a dedicated federal framework for event contracts
• Two separate bills titled the Prediction Markets Are Gambling Act have been introduced in both chambers: Senate Bill 4160 was referred to the Agriculture, Nutrition, and Forestry Committee on 23 March 2026, and House Bill 9856 was referred to the House Committee on Agriculture on 22 July 2026
• The duelling legislative approaches arrive as prediction markets captured 27% of US sports betting volume during the World Cup, according to earlier reporting by iGaming Times
• States have not waited for Congress to act, with Nevada and New York already pursuing legal action against Kalshi, while a federal judge recently denied Kalshi's bid to block New York enforcement
• The Agriculture committees hold jurisdiction over the CFTC, the agency at the centre of the regulatory dispute, meaning the committee assignment signals that derivatives law rather than gambling law is the likely battleground in Washington

Three Bills, Two Visions, and One Overdue Federal Decision

The 119th Congress is now carrying three active bills that would fundamentally reshape the legal status of prediction markets in the United States, and they point in almost entirely opposite directions. Senate Bill 4469, the Prediction Market Act of 2026, was read twice and referred to the Senate Committee on Agriculture, Nutrition, and Forestry on 30 April 2026. It represents the regulatory-recognition path: a bespoke federal framework that would treat event contracts as a distinct financial product governed under Commodity Futures Trading Commission oversight. The two companion bills travelling under the name the Prediction Markets Are Gambling Act take the opposite view. Senate Bill 4160 was referred to the same committee on 23 March 2026, and House Bill 9856 followed in the lower chamber on 22 July 2026, referred to the House Committee on Agriculture. If either of the latter two bills advances, prediction market platforms would face reclassification as gambling operations, exposing them to state licensing regimes rather than federal financial regulation.

All three bills remain at referral stage, meaning none has yet cleared committee. The Agriculture committees hold oversight of the CFTC, which has already launched formal rulemaking on prediction markets, and the assignment of these bills to those committees reinforces that the primary legal question in Congress is whether event contracts fit within commodity derivatives law, not whether they constitute gambling under state statutes. That framing is contested, but it reflects where the institutional momentum currently sits.

The legislative activity arrives in a period of acute regulatory turbulence for the sector. States have moved aggressively while Congress deliberates. Nevada filed a first-of-its-kind lawsuit against Polymarket, New York sued Kalshi for running an alleged illegal prediction market, and a Washington court blocked Kalshi on the grounds that it likely ran unlicensed gambling. Kalshi subsequently settled with Nevada, agreeing to full geofencing, though Nevada's regulator later asked the court to hold Kalshi in contempt over geofencing compliance. A federal judge also denied Kalshi's bid to block New York's enforcement action. The pressure on Capitol Hill to resolve the federal question is no longer theoretical.

The CFTC at the Centre of a Jurisdictional Fight

The choice of the Agriculture committees as the referral destination for all three bills is not incidental. The CFTC reports to those committees, and the central legal dispute in every courtroom clash to date has been whether event contracts on sports outcomes or other non-financial events qualify as commodity futures contracts under the Commodity Exchange Act. If they do, the CFTC has jurisdiction and state gambling laws cannot override it. If they do not, or if Congress decides they should not, the platforms fall back into a patchwork of state regimes, most of which treat them as unlicensed gambling. The Prediction Market Act of 2026 would resolve that question in the industry's favour. The Prediction Markets Are Gambling Act would resolve it against.

The CFTC has already signalled its own inclination toward engagement rather than exclusion: the agency proposed rules in 2026 to govern in-house market makers on prediction market exchanges, a move that presupposes the platforms are within its remit. Congressional action that contradicts that position would create direct friction between the legislative and executive branches over jurisdictional scope.

The Duelling Bills Reflect Genuine Policy Disagreement, Not Just Lobbying Noise

It would be convenient to read the competing bills as a straightforward industry-versus-regulator lobbying contest, but the disagreement runs deeper than that. The Prediction Market Act of 2026 rests on the argument that liquid, transparent event-contract markets aggregate information efficiently, serve a legitimate price-discovery function, and are better overseen by a federal financial regulator than by fifty state gambling agencies with inconsistent standards. The Prediction Markets Are Gambling Act rests on the countervailing argument that when the underlying event is a sports match or an election and the users are retail participants rather than commercial hedgers, the product is gambling by any reasonable definition, regardless of the legal wrapper it carries. Both positions have defensible grounding in law and economics. The fact that the two reclassification bills have attracted sponsors in both chambers suggests the second view has meaningful political support, not merely minority opposition.

The State-Level Crackdowns Have Created Urgency That Committee Referrals Alone Cannot Satisfy

The accumulation of state enforcement actions against major platforms is generating pressure that committee referrals do not relieve. Prediction markets posted record volumes during the 2026 World Cup, and the sector has grown to the point where the absence of a settled federal framework is itself a source of systemic risk: platforms face inconsistent legal exposure depending on where their users are located, states are devoting enforcement resources to actions that a federal resolution would render unnecessary, and investors are pricing regulatory uncertainty into valuations. Kalshi's pursuit of a $40 billion valuation alongside active litigation in multiple states captures that contradiction precisely. Congress can allow that tension to persist by leaving the bills in committee, but the political cost of inaction rises with every new court filing. The Agriculture committees now hold the instruments that could settle the question. Whether they choose to use them, and which version they advance, will determine the structure of a sector that traded more than $50 billion in a single month during the World Cup.