US Sen. Richard Blumenthal of Connecticut introduced legislation on 12 March to establish federal oversight of prediction markets.
The Prediction Markets Security and Integrity Act, co-sponsored by New Jersey Sen. Andy Kim, would impose federally enforced rules on insider trading and market manipulation, and ban listings tied to war, death, or military action.
It would also reverse a Commodity Futures Trading Commission (CFTC) ruling that had attempted to pre-empt state gambling regulations.
Sen. Blumenthal said in a press release about his bill: “Prediction markets have become a haven for insider trading, market manipulation, and underage gambling. These billion-dollar businesses are turning war into a casino game, and creating a market for national security leaks. My measure … puts guardrails on this out-of-control industry.”
The bill also includes provisions for age verification, prohibiting advertising to minors and individuals on self-exclusion lists.
It further requires states that offer sports betting programmes to comply with minimum federal standards related to advertising, affordability, and artificial intelligence.
Platforms that benefit from CFTC designation as a Designated Contract Markets (DCM) have argued that federal commodity law gives them jurisdiction over the entire country.
This has led them into conflict with gaming regulators in over a dozen states.
The courts have so far been inconsistent in their decisions regarding the question of whether federal law pre-empts state gaming laws, with the question generally expected to reach the Supreme Court to decide.
The legislation is designed to address questions that have garnered attention from regulators and lawmakers on both sides of the aisle.
Some of the issues that lawmakers addressed before introducing the bill include trades that occur before major government announcements, minors’ access without proper verification, and contracts based on casualties and military operations.
Drawing a line in the sand
The bill would draw an explicit line between commodity contracts that fall under CFTC oversight and wagering activity that states have historically regulated through their own licensing and consumer protection regimes.
Sen. Blumenthal has previously introduced sports betting legislation targeting the mobile gambling sector.
Last year, he re-introduced the Supporting Affordability and Fairness with Every Bet Act in partnership with Rep. Paul Tonko from New York.
The legislation seeks to require states that offer active sports betting markets to meet a set of minimum federal requirements for marketing and product design.
He has also re-launched the Gambling Addiction Recovery, Investment, and Treatment Act in partnership with Rep. Andrea Salinas from Oregon. The legislation seeks to allocate resources for researching and treating gambling addiction.
The Prediction Markets Security and Integrity Act was referred to committee following its introduction. No vote has been scheduled.
It enters a crowded field of prediction market legislation, with at least four other federal bills pending in the current Congress and more than 20 states having taken some form of action against prediction market platforms since January 2025.