PREDICT Act: Why US Lawmakers Want to Ban Prediction Markets

A new Senate proposal is putting prediction markets back in Washington’s crosshairs. On March 26, 2026, Axios reported that Sen. Jeff Merkley introduced the PREDICT Act, a bill aimed at banning event contracts tied to sports, politics, and military outcomes. The push lands as Kalshi and Polymarket face rising scrutiny over insider-trading risks, federal preemption claims, and state gambling fights. What lawmakers are really debating is bigger than betting: it is whether these markets are financial tools, gambling products, or something in between.

What the PREDICT Act would do

The PREDICT Act is designed to stop federally regulated prediction markets from listing contracts on some of the most controversial real-world events. According to Axios on March 26, 2026, the bill would explicitly bar prediction markets on sports, politics, and military matters, while arguing that Congress never intended the Commodity Exchange Act of 1936 to legalize those categories of event contracts. That matters because platforms such as Kalshi have relied on federal derivatives law, and their status as Commodity Futures Trading Commission-regulated venues, to defend their business model.

The proposal does not appear in a vacuum. It follows a broader March 2026 campaign by Democratic lawmakers to tighten oversight of prediction markets. On March 9, 2026, Sens. Jack Reed and John Hickenlooper urged the CFTC to increase transparency, prohibit wagers on war, and investigate insider-trading risks tied to online prediction markets. Their letter pointed to a striking example: just hours before the January 3, 2026 U.S. raid in Caracas that resulted in Nicolás Maduro’s capture, an anonymous Polymarket account reportedly wagered more than $30,000 on Maduro being out of office by month-end and later netted about $400,000. Even where facts remain contested, that episode sharpened lawmakers’ argument that sensitive event contracts can create incentives and information asymmetries that ordinary financial markets are not supposed to tolerate.

There is also another bill already on the books in Congress. H.R. 7004, the Public Integrity in Financial Prediction Markets Act of 2026, would prohibit certain federal officials and appointees from engaging in covered prediction-market transactions. In other words, Congress is not debating one narrow reform. It is testing multiple ways to wall off prediction markets from politics, public office, and potentially national security.

Why lawmakers say prediction markets are different from normal finance

Supporters of the ban argue that event contracts are not just another derivatives product. Their case rests on three points.

First, they say these markets can look and feel like gambling even when they are wrapped in financial language. Reed and Hickenlooper described platforms such as Kalshi and Polymarket as user-friendly systems that let people wager on sports, elections, corporate earnings, economic data, and award shows while presenting the activity as investing. That framing is central to the political fight. If lawmakers convince enough colleagues that prediction markets are functionally online casinos, the case for a ban becomes much easier to sell.

Second, critics argue that some event categories create obvious manipulation or insider-trading risks. Sports contracts raise concerns about athletes, coaches, and officials. Political contracts raise concerns about candidates, campaign staff, and government insiders. Military or war-related contracts raise the most serious objections of all, because traders could profit from violence, classified information, or geopolitical escalation. Those are not abstract fears anymore. On March 23, 2026, AP reported that Kalshi and Polymarket moved to ban insider trading more explicitly as senators pushed to curb the sector. Axios reported the same day that Kalshi planned to block athletes, coaches, and officials from betting on their own sports, and political candidates from trading on their own campaigns. Companies usually do not tighten rules like that unless pressure is real.

Third, lawmakers say federal law has drifted too far from what Congress originally intended. Axios reported that Merkley’s bill would state directly that Congress never meant the Commodity Exchange Act to authorize prediction markets on sports, politics, and military outcomes. That is a legal argument, but it is also a political one. It tells courts and regulators that if the statute has been interpreted too broadly, Congress is prepared to rewrite the boundaries.

Why the industry says a ban is the wrong answer

Prediction-market operators and their allies see the issue very differently. Their strongest argument is jurisdiction. Kalshi is a CFTC-regulated designated contract market, and legal analyses published in 2025 and 2026 note that the CFTC has increasingly defended its exclusive authority over event contracts offered on registered exchanges. A February 2026 Holland & Knight review said the agency had articulated a broad preemption theory: states cannot simply reclassify CFTC-regulated event contracts as illegal gambling if those contracts fall under federal swaps law.

That position has become more important as states push back. AP reported on March 17, 2026 that Arizona filed criminal charges against Kalshi, escalating the clash between state gambling enforcement and federally regulated prediction markets. A separate legal review noted that Nevada had also moved against Kalshi, while courts in different jurisdictions reached different conclusions. This is the core tension: if the federal government treats these products as derivatives, but states treat them as sports betting or gambling, operators are left fighting on two fronts at once.

Industry supporters also argue that prediction markets can serve a legitimate information function. In that view, event contracts aggregate dispersed beliefs and produce real-time probabilities that can be useful for hedging, forecasting, and price discovery. That argument has long appealed to economists and market-structure advocates. But in 2026, it is colliding with a harder political reality. Once contracts touch elections, wars, or college sports, the public debate stops being academic.

What changed in March 2026

March 2026 was the month the issue broke into a full policy fight. On March 12, 2026, the CFTC’s Division of Market Oversight issued staff advisory 9193-26, reminding designated contract markets of their obligations under the Commodity Exchange Act and Part 38 rules, according to a March 2026 industry summary. Around the same period, the CFTC’s enforcement division also highlighted fraud and nonpublic-information risks in certain prediction markets traded on KalshiEX. Those moves did not ban the products, but they signaled that Washington understood the risks and was preparing a more formal framework.

At the same time, lawmakers were moving in two directions. Some wanted tighter regulation. Sports Business Journal reported on March 11, 2026 that Sens. Richard Blumenthal and Andy Kim proposed the Prediction Markets Security and Integrity Act, which would target fraud, underage usage, and misuse of nonpublic information, while also requiring state authorization. Others wanted a harder line. The PREDICT Act falls into that second camp. Rather than refining the rules, it would cut off entire categories of contracts.

That split is important. It shows the debate is no longer about whether prediction markets need oversight. Nearly everyone in Washington now seems to agree they do. The real question is whether the answer is regulation, prohibition, or a hybrid system that treats some event contracts as acceptable and others as off-limits.

Why this matters beyond Kalshi and Polymarket

The fight is bigger than two platforms. Prediction markets have expanded into a broader financial and media ecosystem. Forbes reported in March 2026 that Kalshi and Polymarket were posting roughly $18.3 billion in combined monthly trading volume. Crypto.com launched a standalone prediction-market platform in February 2026 through a CFTC-registered affiliate, according to the same report. Earlier partnerships also pushed event contracts closer to mainstream brokerage and media distribution.

That scale changes the stakes. A niche forecasting tool is one thing. A multibillion-dollar market tied to elections, sports, and military events is another. Lawmakers are reacting not just to what prediction markets are, but to what they could become if left largely intact under current federal law.

There is also a public-integrity angle that cuts across party lines. AP reported on March 23, 2026 that former Chicago mayor Rahm Emanuel proposed banning federal employees and their families from betting on prediction markets. That proposal is separate from the PREDICT Act, but it points in the same direction: concern that people with privileged information or influence over public outcomes should not be able to profit from those outcomes.

Conclusion

The PREDICT Act is not just another gambling bill. It is an attempt to redraw the legal map for prediction markets in the United States. Supporters say sports, politics, and military event contracts create manipulation risks, insider-trading dangers, and moral hazards that ordinary derivatives law was never meant to permit. Opponents say a categorical ban would ignore the role of federally regulated exchanges and shut down a growing market that can provide legitimate forecasting value.

What happens next will likely depend on whether Congress sees prediction markets primarily as financial infrastructure or as wagering products with unacceptable public-policy costs. That distinction has always been blurry. In March 2026, it stopped being theoretical.

Frequently Asked Questions

What is the PREDICT Act?

The PREDICT Act is a Senate proposal reported by Axios on March 26, 2026 that would ban prediction-market contracts tied to sports, politics, and military outcomes. It is part of a broader push by lawmakers to limit or restructure how event contracts operate under federal law.

Why do lawmakers want to ban prediction markets?

Lawmakers cite several concerns: insider trading, manipulation, underage exposure, gambling-style design, and the possibility of profiting from sensitive events such as elections or military action. Letters from senators in March 2026 and related bills show that these concerns have moved from theory to active legislative proposals.

Are prediction markets legal in the United States?

Some are. Kalshi operates as a CFTC-regulated designated contract market, which gives it a federal legal framework for certain event contracts. But legality is contested, especially when states argue those contracts amount to gambling or sports betting under state law.

How is the PREDICT Act different from other prediction-market bills?

Some proposals focus on regulation, such as tighter integrity rules, age restrictions, or state authorization requirements. The PREDICT Act goes further by seeking to ban specific categories of contracts outright rather than simply regulate them more closely.

Would the bill affect Kalshi and Polymarket equally?

Not exactly. Kalshi’s U.S. business is tied directly to CFTC regulation, so a federal statutory change could hit its listed event contracts in a more direct way. Polymarket, which exited the U.S. after earlier CFTC enforcement, sits in a different legal posture, but the broader policy signal would still matter for its market access and compliance strategy.

What happens next?

The bill would need to move through the normal congressional process, and there is no guarantee it becomes law. Even so, the proposal adds pressure on the CFTC, on courts handling state-federal disputes, and on prediction-market operators already tightening their rules in response to political scrutiny.