Proposed legislation targeting prediction markets boosts traditional sports betting stocks
Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) surged more than 4% after news broke that U.S. lawmakers are preparing legislation aimed at restricting prediction markets from offering sports-related contracts. The move signals a potential shift in the competitive landscape of online betting.
According to reports, Senators Adam Schiff and John Curtis are co-sponsoring a bill that would prohibit prediction market platforms—including companies like Kalshi and Polymarket—from listing contracts tied to sporting events and certain casino-style games. The proposed legislation reflects growing concerns that these platforms are encroaching on traditional gambling markets while operating under different regulatory frameworks.
Prediction markets have long argued that they differ from sportsbooks by allowing users to trade contracts against one another rather than betting against a house. However, the increasing popularity of sports-related contracts has drawn scrutiny from regulators and lawmakers, who question whether these platforms are effectively offering unregulated gambling.
Senator Schiff emphasized the need for congressional intervention, criticizing the Commodity Futures Trading Commission for allowing these markets to expand. Meanwhile, Senator Curtis highlighted concerns about consumer protection, particularly the exposure of younger users to betting-like products outside state oversight.
The regulatory tension extends beyond Washington. Several states, including Nevada and Arizona, have challenged prediction market operators, arguing they violate local gambling laws. Arizona recently escalated the conflict by filing criminal charges against Kalshi, marking a significant development in the ongoing legal battle.
For established sportsbooks like DraftKings and Flutter—owner of FanDuel—the proposed restrictions could limit emerging competition and reinforce their market position within the state-regulated betting ecosystem established after the 2018 Supreme Court decision that legalized sports betting nationwide.
As lawmakers and regulators debate the future of prediction markets, investors are increasingly viewing traditional gaming companies as beneficiaries of tighter oversight, highlighting how regulation continues to shape the evolution of the digital betting industry.
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