End of Backdoor Betting: US Lawmakers Introduce Bill to Ban Prediction Markets

The American gambling landscape is facing a significant regulatory shift as lawmakers move to dismantle what they describe as a backdoor for illegal betting. Congressmen Steven Horsford and Mark Amodei have officially introduced the Prediction Markets Are Gambling Act. This bipartisan legislation is designed to prevent federally regulated trading platforms from offering sports betting and casino-style games under the guise of financial products. According to the bill's sponsors, companies have been exploiting federal loopholes to sidestep the licensing requirements and tax obligations that every legal sportsbook in the United States must follow.

For years, platforms like Kalshi and Polymarket have operated in a gray area, often regulated by the Commodity Futures Trading Commission (CFTC) rather than state gaming boards. This has led to a massive loss of public funds. Rep. Horsford pointed out that these companies have already cost states over $1 billion in lost gaming tax revenue. This money, he noted, should have been used to fund essential infrastructure like schools and roads. The bill seeks to restore authority to state and tribal regulators, ensuring that any activity resembling a bet is treated as such by the law.

Numbers and facts

The financial stakes involved in this legislative battle are staggering. Kalshi is currently pursuing a fundraising round that could value the platform at $20 billion, an astronomical leap from its $2 billion valuation just a year prior in June 2025. This growth is driven by massive trading volumes on real-world events. For instance, the 2026 FIFA World Cup has already generated more than $2.36 billion in cumulative volume on Polymarket, making it one of the most traded events in the history of such platforms. Kalshi’s own World Cup winner market has seen approximately $281 million in activity.

Demographics are also shifting. Data suggests that these platforms are successfully reaching audiences that traditional sportsbooks have struggled to attract. The percentage of female users on Kalshi jumped from 13 percent to 26 percent in less than a year. Critics argue this is precisely why stricter oversight is needed, as younger and more diverse populations are being exposed to potentially addictive gambling products without the consumer protections found in the regulated gaming industry.

"Sports prediction contracts are sports bets — just with a different name. And yet, these contracts have been offered in all fifty states in clear violation of state and federal law." - Adam Schiff, Senator, U.S. Democratic Party

Background

The debate hinges on the distinction between legitimate financial hedging and speculative gambling. The proposed bill makes it clear that while bona fide hedging instruments — such as an ice cream shop owner using weather contracts to offset losses during a cold spell — will remain under CFTC jurisdiction, sports and election-based contracts will not. The goal is to stop sports betting from masquerading as financial trading. Industry groups like the American Gaming Association (AGA) have expressed strong support, noting that the bill protects the integrity of the regulated market.

Labor unions are also sounding the alarm. In Nevada, the Culinary Union representing 60,000 workers warns that unregulated prediction markets threaten the livelihoods of hospitality staff at major casino resorts. They argue that these out-of-state tech companies are siphoning revenue away from a system that supports fair wages, health benefits, and pensions for tens of thousands of families. By resolving this issue directly through statute, Congress hopes to avoid years of litigation and clarify that gaming remains a state and tribal responsibility.

Why it matters for German players

For players in Germany, the US situation highlights the stability provided by the State Treaty on Gambling (GlüStV 2021). While US regulators struggle to define these new markets, German law is clear: any form of public gambling requires a license from the GGL. German players are protected by mandatory deposit limits of 1,000 euros per month and a 1-euro stake limit on virtual slots. These measures, integrated through the LUGAS and OASIS systems, prevent the kind of unregulated expansion currently causing chaos in the American market. For a German user, the lesson is clear: stick to GGL-licensed operators to ensure that your deposits and rights are protected by law.

What it means for GGL-licensed casinos

Licensed operators in Germany benefit from a high barrier to entry and a clearly defined legal framework. Unlike their US counterparts, who must now compete with multi-billion dollar "trading" apps that avoid gambling taxes, German GGL-licensed casinos operate on a level playing field. The news from the US reinforces the value of legal certainty. As the US moves toward a more restrictive and clearly defined model similar to the German approach, the global trend confirms that strict regulation and high consumer protection standards are the only sustainable path for the iGaming industry.