After Yesterday's Hearing, Congress Looks Ready to Legislate on Prediction Markets — Not Just Watch

The House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development held a two-hour hearing on July 22 titled 'Examining Customer Protections and Market Integrity in Sports Event Prediction Markets.' The session was more hostile to prediction markets than the May Senate hearing that preceded it. Subcommittee Chair Dusty Johnson (R-SD) opened by saying it is 'abundantly clear that Congress cannot afford to be silent' on the issue, and closed by saying there is 'work for them to do' — the clearest signal yet from a committee chairman with jurisdiction over the CFTC that congressional action on prediction markets is now likely, not hypothetical.

The hearing heard testimony for H.R. 7840, the Event Contract Enforcement Act, which would prohibit sports event contracts on prediction market platforms nationwide — a statutory ban that would resolve the CFTC-versus-states question by simply removing the product category from federal permissibility. Rep. Jill Tokuda (D-HI) was the session's most direct voice: 'This is gambling. It's gambling.' Tokuda noted that prediction markets have been actively marketed as gambling by the operators themselves — a factual point that sits in tension with the legal argument that event contracts are financial instruments, not wagers. She also observed that the current federal structure effectively makes sports-outcome speculation available to any American over 18, in all 50 states, irrespective of whether their state has legalized sports betting. Eleven states have not.

Pro-prediction-market witnesses — led by former CFTC attorneys Robert Schwartz and Carl Kennedy — argued that the CFTC already possesses the statutory authority to regulate sports event contracts under the Commodity Exchange Act, and that new legislation is neither necessary nor desirable while courts are still working through the preemption questions. Solidus Labs CEO Asaf Meir defended the integrity-monitoring infrastructure in place on prediction market platforms, countering the AGA's argument that unlicensed prediction markets create the same sports corruption risks as sportsbooks without the same oversight. The absence of any representative from Kalshi, Polymarket, or any other prediction market platform at the witness table was noted: the industry's legal representatives spoke, but the industry itself did not appear.

The hearing adds a third active front to a fight that is already being waged simultaneously in ten state courts and through the CFTC's own proposed rulemaking — whose public comment window closes July 27. The practical significance of the congressional front is that legislation supersedes both. If H.R. 7840 or a similar bill were to pass, it would moot the CFTC's proposed rule and resolve all ten state lawsuits in the states' favor by removing the federal basis for prediction market sports contracts entirely. That outcome is not imminent — the Republican majority on the Agriculture Committee has been more sympathetic to CFTC authority than Democrats, and Chair Johnson stopped short of endorsing any specific bill. But the session made clear that the prediction markets sector now has to manage a congressional timeline as well as a judicial one.

Operators mentioned in this article

CFTC-regulated

Kalshi

First fully CFTC-regulated US event-contract exchange.

Crypto / On-chain

Polymarket

USDC-settled on Polygon. Largest prediction market by volume.

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