STOP Corrupt Bets Act Would Ban Prediction Market Wagers on Sports, Elections, and More
A new federal bill would essentially outlaw what Kalshi and Polymarket have built — and it's drawing serious attention in Congress as state-level battles multiply.
A federal bill introduced in Congress, known as the STOP Corrupt Bets Act, would ban prediction market contracts on elections, sporting events, armed conflict, and government actions if enacted into law. The legislation represents the most significant federal effort to date to restrict the fast-growing prediction market sector and comes as the legal and regulatory battle between state gaming authorities and federally regulated prediction market operators has intensified to an unprecedented level.
The bill broadly targets event contracts — the instruments that underpin platforms like Kalshi and Polymarket — and would treat wagers on the covered categories as a form of unregulated gambling rather than as federally regulated financial instruments. Supporters argue the products function as gambling regardless of their regulatory classification and that allowing them to operate outside of state gaming frameworks creates integrity risks, particularly when tied to sporting event outcomes.
The Federal-State Jurisdiction War
At the core of the prediction market controversy is a fundamental disagreement over whether event contracts fall under the authority of the Commodity Futures Trading Commission, which oversees derivatives and swaps, or under state gambling law, which governs sports wagering. Prediction market platforms have consistently argued that they operate as federally regulated financial exchanges and that state gambling laws are preempted by federal commodities law. State gaming regulators and attorneys general have rejected that position, filing lawsuits and issuing cease-and-desist orders in more than a dozen states.
The CFTC has sided with the prediction market operators, filing suits against multiple states including Wisconsin, New York, Connecticut, Illinois, Arizona, and Minnesota in an effort to block state enforcement of their gambling statutes against federally licensed prediction market operators. The Trump administration has expressed support for CFTC authority over the products, describing them as legitimate financial instruments. Thirty-eight state attorneys general have filed an amicus brief in support of Massachusetts’s lawsuit against Kalshi, arguing that states have traditionally regulated gambling and that Kalshi’s preemption theory threatens state authority to protect their own residents.
What the STOP Corrupt Bets Act Would Do
If the STOP Corrupt Bets Act were to pass, it would effectively resolve the federal-state jurisdictional dispute by removing the category of sports and election event contracts from the list of instruments the CFTC has authority to approve. This would eliminate the federal regulatory shield that prediction market operators have relied on to resist state enforcement actions, and it would expose platforms like Kalshi and Polymarket promo code to the same state gambling laws that govern traditional sportsbooks.
The bill has not yet cleared committee, and its path through Congress is uncertain given the divided political environment and the support prediction markets have received from parts of the Republican caucus and from President Trump. However, its introduction adds a new dimension to a fight that has previously been conducted largely in federal and state courts. For bettors and operators navigating the legal status of prediction markets, the congressional debate introduces additional uncertainty into an already complicated regulatory picture.
The trading volume on prediction market platforms has expanded rapidly in the past two years, growing from approximately $1.2 billion in early 2025 to over $20 billion by early 2026, attracting major institutional investment including a $2 billion funding round from Intercontinental Exchange into Polymarket. The AGA has argued that this growth has come at the direct expense of licensed sportsbooks and state tax coffers, claiming more than $1 billion in lost revenue annually. Whether the STOP Corrupt Bets Act advances or not, the debate it has sparked is likely to shape prediction market regulation for years to come.