Senators Grill Kalshi, Crypto.com for 2 Hours as Prediction Markets Face Gambling, Youth-Safety Criticism
Updated
Updated · CoinDesk · May 20
Senators Grill Kalshi, Crypto.com for 2 Hours as Prediction Markets Face Gambling, Youth-Safety Criticism
9 articles · Updated · CoinDesk · May 20
Two hours of Senate Commerce questioning put Kalshi and Crypto.com under pressure over sports-event contracts, with lawmakers from both parties warning the platforms could fuel cheating, problem gambling and conflicts with state-regulated gaming.
Ted Cruz cited recent scandals involving NBA, MLB, MLS and UFC figures, arguing betting incentives can tempt athletes and coaches to manipulate performance or leak insider information, undermining trust in games.
John Hickenlooper and addiction advocate Harry Levant also targeted marketing, saying prediction-market ads reach young people and vulnerable users; Kalshi CEO Tarek Mansour this week announced a $2 million problem-gambling initiative.
The hearing unfolded as the CFTC sued Minnesota on Tuesday to block a law treating prediction-market activity as illegal there, adding to fights with Arizona, Connecticut, Illinois and New York over whether the products are derivatives or gambling.
That jurisdictional clash now reaches Congress as tribal and gaming groups say federal oversight threatens state and reservation revenue, while Cruz said the Supreme Court may ultimately have to settle the dispute.
With states losing millions in tax revenue, is a federal takeover of prediction markets now inevitable?
Are these platforms creating new addicts by marketing high-stakes gambling as a financial investment?
$100 Billion Prediction Markets Face Historic Legal Showdown: Minnesota Ban, Federal Lawsuits, and Insider Trading Fears Reshape U.S. Regulation
Overview
Minnesota recently became the first state to enact a sweeping ban on prediction markets, reflecting a broader struggle among states to regulate these rapidly growing platforms. As at least 14 other states consider similar legislation, the federal government, through the CFTC, quickly responded by filing a lawsuit against Minnesota, asserting its exclusive authority over prediction markets. This move is part of a larger legal battle, with the CFTC already challenging several states in court to defend its jurisdiction. The clash between state bans and federal oversight has created a fragmented and uncertain legal landscape for prediction markets nationwide.