A pair of bipartisan senators on Wednesday said they are keeping up their push to ban sports prediction market contracts, despite Kalshi and PolyMarkets announcing new insider trading restrictions on their platforms.
“This should be more than an ambitious statement by these companies,” Sen. Adam Schiff, D-Calif., told CNBC’s “Squawk Box” when asked about those platforms’ self-imposed new rules.
Kalshi said on Monday that this will already happen Stop politicians, athletes and “other relevant people” from placing bets on their own campaigns or sporting events.
That same day, Polymarket announced It will put in place its own guardrails to address insider trading and market manipulation.
The new restrictions come as Schiff and Senator John Curtis, R-Utah, Pur: Legislation This would give control over sports betting and casino-style games to states rather than federal regulators.
The bill would prevent Commodity Futures Trading Commission-registered entities from listing any such forecasting contracts.
In a joint CNBC interview Wednesday morning, the senators said the companies’ efforts to police themselves are inadequate.
“I don’t think it’s enough,” Schiff said. “It’s one thing to say, ‘This is our policy.’ “It’s another step forward in really taking steps to make sure it’s not happening on those platforms.”
Curtis has said that his bill with Schiff, the “Prediction Markets Gambling Act,” is “about keeping speculative financial products out of places where they don’t belong.”
“You have to ask, ‘What could go wrong?'” he said on CNBC. “Imagine betting on a high school athlete getting injured on a high school game day… you can see how wrong that could go.”
Schiff warned about the possibility of “a massive amount of insider trading” that could not be addressed under existing rules. He pointed to recent reports Some speculators have earned significant sums by predicting the events of the Iran war with extreme accuracy.
“This is largely indicative of insider trading, and while it can be done using blockchain, there’s really no way to regulate it, at least it’s not being regulated today,” he said.
Prediction markets, which allow users to bet on almost anything quickly and easily, have become much more popular and accessible in recent years. That popularity has led to increasing criticism across the political spectrum.
D.N.Y. “Gambling at large is not good for society,” U.S. Representative Alexandria Ocasio-Cortez said last week in response to PolyMarket being made the exclusive prediction market exchange partner for Major League Baseball.
At the same time, the financial effects of widespread betting are coming under greater scrutiny. economist of The Federal Reserve Bank of New York said in a report Wednesday morning sports betting “could have a dramatic impact on domestic financial stability.”
“Even though the share of people engaging in sports betting after legalization is small (about 3 percent of the population), overall loan defaults increased by about 0.3 percentage points,” Fed researchers said.
While any legislation faces a difficult path in Congress, Schiff and Curtis expressed optimism that their bill has enough bipartisan support to clear the House and Senate.
“I think this is one of those areas where we agree on a lot more than we disagree on, and I think those areas of disagreement are getting narrower and narrower,” Curtis said.
Disclosure: CNBC and Kalshi have a commercial relationship that includes a CNBC minority investment.