The rapid rise of prediction markets is drawing fresh scrutiny from Capitol Hill, where lawmakers focused on children's digital safety are demanding answers on how these platforms keep underage users off their sites. The push, which also involves gambling researchers, threatens to reshape the regulatory landscape for an industry that has boomed in recent months.
At the center of the debate is a concern that prediction markets—where users bet on outcomes like election results or sports events—are normalizing gambling for a generation of young people. Jonathan Cohen, sports betting policy lead at the American Institute for Boys and Men, warned that the cultural acceptance of these markets is creating a dangerous pull for teenagers. “We’ve socialized it, and now a 17-year-old wants to do it,” he said, noting that teens are unlikely to care about the Commodity Futures Trading Commission’s regulatory structure.
Lawmakers are still learning the mechanics of prediction markets, but legislative action is accelerating. A bipartisan pair of senators—Richard Blumenthal (D-Conn.) and Katie Britt (R-Ala.)—introduced the Gaming Advertisement to Minors Enforcement (GAME) Act on Monday. The bill would ban sports betting and prediction market ads on platforms like Instagram and TikTok, with fines up to $100,000 per violation. Blumenthal accused the industry of “treating young people like a gold rush,” while Britt called the ads a “gateway to dangerous habits.”
This follows Blumenthal’s March bill targeting prediction market abuse, which mandates age verification and bans advertising to underage users and those on self-exclusion lists. The measures reflect a broader effort to tighten controls on digital platforms, similar to ongoing battles over social media and AI safety. As new poll data shows rising financial anxiety, some lawmakers argue that vulnerable populations are especially at risk.
Kalshi, a federally regulated prediction market, has moved to preempt criticism by rolling out new safeguards. The platform now defaults to face ID for users with compatible phones and encourages two-factor authentication. It also lets users check for unauthorized logins and requests selfies from higher-risk individuals. Elisabeth Diana, Kalshi’s head of communications, said the goal is to “create more friction for people who maybe are higher risk,” though she acknowledged the company is “trying to get ahead” of potential issues rather than reacting to a known problem.
Critics remain skeptical. Researchers point out that users between 18 and 21 can still legally access these platforms in most states, where the gambling age is 21. Another bipartisan bill, from Sens. John Curtis (R-Utah) and Adam Schiff (D-Calif.), would prohibit prediction contracts that “resemble a sports bet or casino-style game,” aiming to close that loophole. Curtis argued that such contracts “belong under state control,” not federal regulators.
The debate hinges on a fundamental question: Are prediction markets a form of gambling or a legitimate financial product? Operators insist they are distinct, and CFTC Chair Mike Selig has backed that view, arguing they fall under federal jurisdiction. He has even sued states that tried to impose their own gambling laws. This split has created a patchwork of rules that lawmakers are now racing to reconcile, especially as concerns about youth addiction grow. Meanwhile, the political landscape remains volatile, with Democrats facing potential midterm losses if they fail to address working-class worries about economic stability.
As Congress weighs these bills, the industry is bracing for tighter oversight. The outcome could set a precedent for how digital betting platforms are regulated in the U.S., with implications for everything from sports gambling to election forecasting.
