Senate Questions Prediction Markets over Sports Integrity

Senators on the Senate Consumer Protection Subcommittee on Wednesday pressed advocates for prediction markets over whether event contracts and microbets operate like sports bets and pose risks to the integrity of games.

Subcommittee Chair Marsha Blackburn opened the session with concerns about eroding public trust in sports, harassment of college athletes, aggressive social media outreach to young people and potential gambling addiction. She warned that prediction markets can operate “much like traditional sports betting without enforcement of state regulators.”

Patrick McHenry, senior adviser to The Coalition for Prediction Markets, faced sustained questioning from Republican and Democratic members. He defended exchanges as different from sportsbooks, noting that many platforms take a trading fee rather than setting betting lines and that some coalition members do not offer the most granular microbets, such as the next pitch or next play.

Republican senators focused on whether event contracts meet the Commodity Exchange Act definition of a swap and whether individual microbets have meaningful economic consequences. Sen. Ted Cruz questioned how a wager on “whether a pitcher will throw a ball or a strike” would produce an economic effect. McHenry replied that event contracts are “not fully random” and said consumers, the courts and Congress should help define which contracts qualify as swaps.

Democrats raised advertising and consumer-protection concerns. Sen. John Hickenlooper referenced a social media advertisement in which a woman claimed she paid rent after trading on a platform and questioned whether that messaging was responsible. McHenry told the panel he had not seen the ad.

Witnesses on industry integrity framed remedies differently. Bill Miller, president and CEO of the American Gaming Association, supported the leagues’ request that operators remove bets flagged as integrity risks. Asked whether a sportsbook should stop offering a bet when a league raises integrity concerns, Miller responded affirmatively.

Scott Sadin, chief executive of Integrity Compliance 360, identified player props, micro betting and in-game markets as most vulnerable to manipulation because a single individual can influence outcomes. He urged regulators to apply rules to those markets instead of driving activity offshore.

The hearing also addressed who testified. Representatives of major sportsbooks were not on the panel. The late addition of Dr. Harry Levant, director of gambling policy at the Public Health Advocacy Institute, drew scrutiny after reporting that he pleaded guilty in 2015 to multiple felony counts related to theft and still owes victims about $1.7 million.

Senators referenced pending litigation that could shape federal oversight. New Jersey has sued exchange Kalshi and is seeking Supreme Court review of whether certain event contracts are lawful under federal commodities law. Several members said they may pursue legislative or oversight options depending on court and regulator actions.

The session combined partisan criticism with cross-party agreement on specific integrity concerns, and senators indicated further hearings and potential regulatory responses as the Commodity Futures Trading Commission and the courts consider pending issues.