Ro Khanna calls for federal ban on sports prediction markets

Rep. Ro Khanna has called on Congress to ban sports-event contracts offered by prediction-market platforms, arguing that they are sports bets presented as financial trading. In a Nov. 10 post on X, Khanna said the products flout state and tribal gambling laws, drain state tax revenue and evade consumer safeguards.

Khanna named Kalshi and Polymarket in his criticism, according to Gaming America, saying they offer “sports betting disguised as financial trading.” He also argued that the platforms fuel addiction and expose young Americans to public-health risks. Khanna represents California’s 17th Congressional District, which includes much of Silicon Valley.

The dispute turns on whether the contracts should be treated as federally regulated derivatives or as gambling subject to state and tribal rules. Kalshi says its exchange matches traders with one another, rather than setting odds or taking the other side of customers’ bets. It says it earns transaction fees rather than profiting directly from customer losses, and argues that federal derivatives rules govern its operations.

The Congressional Research Service has found that sports-event contracts may create regulatory arbitrage: they offer products similar, though not identical, to state- and tribal-regulated sports gambling while avoiding some state requirements. Participants in event contracts can generally be 18, compared with a typical minimum age of 21 for state-regulated sports gambling, and exchanges generally do not pay the gambling taxes levied on casinos and licensed sportsbooks.

Sports and related parlay-style products account for a vast majority of prediction-market trading volume. The rapidly growing sector remains smaller than state-regulated sportsbooks but has come into conflict with state regulators since its expansion into sports in early 2025. Sports contracts have been listed in all 50 states, including states that restrict or prohibit sports betting, according to Sens. John Curtis and Adam Schiff.

Khanna’s call comes as Curtis and Schiff have introduced the Prediction Markets Are Gambling Act. The measure would prohibit CFTC-registered exchanges from listing contracts resembling sports bets or casino-style games, and says the Commodity Exchange Act does not preempt state laws that regulate or prohibit them.

As this publication reported in September, Rep. Steven Horsford has separately advanced House legislation seeking to stop federally regulated platforms from offering sports betting and casino-style gambling as financial products. Horsford and Rep. Mark Amodei said their bill would close what they describe as a federal loophole around gaming licensing, consumer protections, taxes and oversight.

The CFTC’s role remains central to the conflict. Under the Commodity Exchange Act, registered exchanges may self-certify event contracts that meet statutory and agency requirements, while a special rule allows the commission to find that gaming-related contracts are contrary to the public interest. The agency had for 15 years enforced authority to prohibit gaming-related contracts, but the commission and its chair later changed course through litigation interventions and rulemaking aimed at relaxing enforcement.

About 20 states are involved in legal disputes over prediction-market operations. Michigan and Nevada have blocked sports-event contracts, while Utah brought criminal charges against Kalshi’s co-founders after an undercover agent made 12 trades on the platform. The CFTC has sued about 10 states since April, including New York, Illinois and Utah.

The political stakes have grown alongside the industry. Kalshi’s October funding round raised $1 billion at a $40 billion valuation, and reports on Nov. 12 said the company was discussing another round at a potential $65 billion valuation. Democrats may pursue hearings, investigations or further legislation targeting sports contracts after taking control of Congress in January 2027.