Senators Target Sports Betting as Nevada Halts Kalshi
A bipartisan group of U.S. Senators has initiated a legislative push to ban sports betting on prediction markets, escalating a nationwide regulatory campaign against the platforms. This federal move targets a core business for operators like Kalshi and Polymarket, which have facilitated billions in wagers by classifying them as financial contracts rather than bets to circumvent state-by-state gambling laws.
The proposed federal ban follows aggressive enforcement at the state level. On March 21, a Nevada judge issued a temporary restraining order against Kalshi, prohibiting it from offering sports, election, and entertainment contracts in the state. The judge determined state regulators had a "reasonable likelihood of success" in arguing Kalshi operates as unlicensed gambling. A hearing on a more permanent preliminary injunction is scheduled for April 3. This action represents Nevada's third such order against a prediction market, following similar moves against Polymarket and Coinbase.
Insider Trading Fears Spur Calls for a Federal 'BETS OFF' Act
Regulators' concerns are amplified by high-profile instances of alleged insider trading. One trader netted over $400,000 by betting on the capture of Venezuelan President Nicolás Maduro just before the top-secret U.S. military operation occurred. Another platform, Polymarket, saw a $553,000 payout on a contract predicting the ouster of Iranian Supreme Leader Ali Khamenei ahead of his death in a military strike. These events have fueled accusations that the platforms are vulnerable to manipulation by those with privileged information.
Responding to these concerns, Senator Chris Murphy and Representative Greg Casar introduced the "BETS OFF Act" to prohibit markets on sensitive government actions, terrorism, and war. Senator Murphy has been a vocal critic, calling the platforms a potential source of corruption.
This is a rigged and dangerous product, and a brand-new source of mind-bending corruption.
— Chris Murphy, U.S. Senator.
Kalshi's $22B Valuation Clashes With Mounting Legal Threats
The intensifying legal battles expose a fundamental conflict over who regulates these markets. Platforms like Kalshi, which is regulated by the U.S. Commodity Futures Trading Commission (CFTC), argue they are financial exchanges. However, state gaming commissions contend the platforms are functionally illegal gambling operations. This conflict is coming to a head as states abandon cease-and-desist letters in favor of more potent legal tools, including the criminal charges Kalshi now faces in Arizona.
This regulatory pincer movement creates significant uncertainty for the industry's future, even as it attracts massive capital. Kalshi recently closed a $1 billion funding round at a $22 billion valuation, underscoring the high stakes for investors. The outcome of legal challenges in states like Nevada and potential federal legislation will be pivotal in determining whether prediction markets can operate at scale in the United States or will be forced to dramatically curtail their offerings.
Edgen Crypto·Mar 23 2026, 10:41