US Senate Hearing Scrutinizes Prediction Markets for Gambling Risks
A U.S. Senate Commerce Committee hearing on Wednesday critically examined prediction market platforms like Kalshi and Crypto.com, focusing on advertising to children, potential athlete cheating, and conflicts with regulated gaming. Chairman Ted Cruz highlighted high-profile incidents of player cheating that "sow doubt in the minds of fans," including NBA players allegedly manipulating performance and MLB pitchers rigging pitches. Senator John Hickenlooper accused the platforms of unleashing the "hounds of hell" in marketing to prey on young people. Harry Levant, a recovering gambling addict, testified that prediction markets are "a known addictive product, just like heroin." The industry faces a legal battle with the Commodity Futures Trading Commission (CFTC), which filed a lawsuit on Tuesday to block a Minnesota law outlawing prediction markets, adding to similar fights against Arizona, Connecticut, Illinois, and New York. CFTC Chairman Mike Selig defended the agency's authority, while witnesses like Bill Miller, CEO of the American Gaming Association, argued the CFTC is not competent to regulate these markets. Former Representative Patrick McHenry, now an adviser to the Coalition for Prediction Markets, contended that event contracts are derivatives with different business models from gambling. Chairman Cruz concluded that "the Supreme Court may have to decide the issue."
Key facts
- Senators questioned Kalshi and Crypto.com over ads targeting children and cheating risks.
- Ted Cruz cited NBA, MLB, MLS, and UFC cheating cases tied to gambling.
- Witness called prediction markets 'addictive like heroin' amid heavy advertising.
- CFTC sued Minnesota to block state law outlawing prediction markets.
- Chairman Cruz suggested the Supreme Court may need to resolve regulatory conflicts.