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A House Agriculture subcommittee on Tuesday examined whether federal law is equipped to handle the surge of sports-related contracts on prediction markets such as Kalshi and Polymarket.
Lawmakers from both parties questioned whether the Commodity Futures Trading Commission should remain the primary regulator of the contracts or whether they instead belong under state and tribal gaming rules.
Subcommittee Chairman Dusty Johnson, R-S.D., said in his opening statement that to many Americans the products "look a lot like sports betting," while others see them as "innovative financial products" that provide useful information about future events.
Drawing that line, Johnson said, is a central reason Congress is examining the commission's toolkit.
The sports pivot is what has drawn the political heat.
A Pew Research Center analysis found that since July 2024, sports has accounted for 80% of trading volume on Kalshi and 39% on Polymarket, and combined monthly volume on the two platforms climbed to about $24 billion in April, roughly $10 billion above what U.S. sportsbooks averaged per month in 2025.
Kalshi told CNBC it added 3 million users during the FIFA World Cup, with its tournament-winner market topping $1.2 billion.
In written testimony, American Gaming Association Senior Vice President Chris Cylke argued the contracts are sports betting "in every meaningful sense" and are being sold nationwide outside state and tribal frameworks that license and tax traditional sportsbooks.
Cylke told the panel the practice makes a "mockery of congressional intent" and drains community tax revenue.
Indian Gaming Association Chairman David Bean urged the committee to advance legislation that would codify existing rules barring gaming-related contracts.
Bean also told lawmakers that the commission is short-staffed and relies on operators to self-certify.
The dispute has spilled into court.
On July 14, the commission used emergency authority to order Kalshi to keep filling open Michigan sports trades even after an Ingham County judge barred the platform from offering sports contracts in the state and required certain trades to be voided.
Rep. Jill Tokuda, D-Hawaii, called the current setup "regulatory arbitrage" that holds tribes and states to a higher bar than federally supervised platforms.
Defenders countered that commodities law already includes customer protections, a point that Katten Muchin partner Carl Kennedy pressed at the hearing.
No Kalshi or Polymarket executives testified.
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