March Madness is about to get a lot tamer for avid sports fans across the country, and that’s not a good thing.
Sens. John Curtis (R-UT) and Adam Schiff (D-CA) recently introduced a bill that would directly prohibit prediction markets from offering wagers on athletic events. As prediction markets are quickly becoming a mainstream phenomenon, this will have a huge negative impact on sports fans and the larger industry alike.
Unlike traditional sports gambling, prediction markets such as Polymarket and Kalshi offer derivative products with peer-to-peer trading on event probability. Sports bets, meanwhile, are wagers placed against a bookmaker with fixed odds. For users, this means unique knowledge and familiarity with the game can improve their chances of winning — an advantage that lobbyists and regulators have been quick to challenge.
MARCH MADNESS COLLIDES WITH PREDICTION MARKET CHAOS
This critical distinction has already led the Commodity Futures Trading Commission chairman to publish a statement asserting the agency’s authority over these unique markets. The CFTC, with the help of Congress, will likely continue to refine the definitions around prediction markets and write rules for how they function.
But the efforts to ban predictions on sports, one of the most popular trends on the platforms, would be a terrible move.
Banning sports prediction markets is arbitrary and counterproductive, hurting business and consumers alike. Singling out prediction markets, while allowing traditional sportsbooks to offer bets legally, is not only inconsistent but also likely to stifle innovation, reduce transparency, and drive activity into unregulated spaces.
While offering fundamentally different products from DraftKings or FanDuel, Kalshi or Polymarket clearly compete with the traditional gambling space. This inherently suggests efforts to prohibit sports prediction markets are a move of regulatory capture or favoritism toward incumbent gambling industries. This will keep the broad sports industry stuck, without an incentive for entrepreneurs and business leaders to solve the various challenges such predictions or bets face.
The data science of prediction markets is transforming the financial industry by bringing new information to investment strategies and risk management. Restricting one of the most popular segments of this emerging market will prevent the evolution in financial technology, data analytics, and online platforms that it can spur. Such a harsh step would chill experimentation in financial products that might later benefit broader markets, reducing economic growth and American dynamism.
Not to mention, the effort to enact digital prohibition has proven time and time again to be unrealistic. The proposed TikTok ban never occurred. The United Kingdom’s efforts to age-gate the internet are proving tricky thanks to VPNs and other technology. Online prediction markets are difficult to regulate across international borders, as each country holds its own unique laws. That means that when one enacts strict prohibitions on certain services or platforms, users opt to access offshore versions. And with that, problems ensue.
Shifting users into unregulated spaces such as foreign internet servers that lack transparency, dispute resolution, and consumer protections is a bad idea. Legal, regulated prediction markets offer clear odds, payouts, and rules, reducing risks of fraud compared to underground alternatives. The CFTC holds a clear authority to regulate these markets in ways that inform consumers and ensure fairness with Congress’s guidance. Outright bans, meanwhile, avoid any responsibility to write the playbook for this budding industry.
Sports markets are an easy scapegoat for critiques of prediction markets. The examples of how their derivative products can be manipulated by insider information, match-fixing, and manipulation are easy for most to understand. But the truth is that traditional sports bets already present similar risks. Leagues including the NFL, MLB, and the NBA have introduced extensive rules and policies to curb this foul play.
WHO WANTS TO DESTROY MARCH MADNESS?
In many ways, prediction markets offer greater transparency and auditability, making manipulation less likely and more detectable than opaque private bets. Banning sports wagers in prediction markets achieves little in terms of consumer protection or sports integrity, while introducing serious economic costs, stifling innovation, and incentivizing unregulated alternatives.
If lawmakers want to regulate gambling or predictions effectively, they should focus on consistent, evidence-based rules across all platforms, rather than arbitrarily targeting emerging market competitors. The ball is in their court.
Sam Raus is the David Boaz resident writing fellow at Young Voices and a public relations professional.