Senators eye crackdown on prediction markets advertising to minors

Sen. Ted Cruz, R-Texas, speaks Wednesday at a Senate subcommittee hearing focused on the recent surge in popularity of sports betting and betting by minor. Photo by Erika Tulfo/Medill News Service
WASHINGTON, May 20 (UPI) — As sports betting and prediction market platforms like Kalshi and Polymarket grow in popularity, U.S. senators on Wednesday weighed the need to regulate use of the platforms by minors.
One main issue senators raised during a hearing by the Senate Commerce Subcommittee on Consumer Protection, Technology and Data Privacy was how prediction markets use social media to advertise their platforms to underage users, putting them at risk of a gambling addiction.
“Young people are being inundated with advertisements on social media. Their favorite influencers and sports figures are introducing minors to betting,” said Sen. Marsha Blackburn, R-Tenn., who chaired the hearing.
“This is not safe. It needs to stop, and advertising to minors is disgusting,” Blackburn said.
The “No Sure Bets: Protecting Sports Integrity in America” hearing was intended to discuss the prevalence of sports betting and its impact on the integrity of matches.
It followed a unanimous Senate vote last month to ban its members and their staffs from trading on prediction market platforms, and the senators seemed determined to do more. Issues surrounding gaming continue to be a hot topic in Congress, where more than 10 active bills are related to prediction markets.
Some recent high-profile scandals surrounding prediction market platforms have also drawn attention to the industry, including the arrest of U.S. Army soldier Gannon Van Dyke last month. He was charged with using classified information to profit from a Polymarket wager related to the capture of Venezuelan president Nicolás Maduro in January.
In the same month, Kalshi fined and suspended from its platform three congressional candidates for betting on the outcomes of their own elections.
In the hearing, Sen. John Hickenlooper, D-Colo., criticized prediction markets like Kalshi for hiring social media influencers to promote their platforms to adolescent users.
“I think it’s specifically dangerous for minors to get into sports betting, and especially on prediction markets. That’s why almost all the states say [the legal betting age] is 21, not 18,” Hickenlooper said.
“Prediction markets let users as young as 18 bet on sports, but they also market their products to younger, more vulnerable audiences who are in many cases adept at getting around the platform precautions.”
A study released in January by Common Sense Media found that more than one-third of adolescent boys aged 11 to 17 admitted to engaging in gambling over the past year. Almost 60% of those who have been gambling said that they were exposed to gambling content through social media.
Kalshi, in an email, denied advertising to minors and pointed to recently implemented consumer protection measures, including requesting a selfie from the user to supplement documents verifying their age.
Hickenlooper grilled Patrick McHenry, a former U.S. representative now acting as senior adviser to the Coalition for Prediction Markets, on the guardrails to ensure underage users could not access their platforms.
McHenry pointed to the Commodity Futures Trading Commission, which oversees prediction markets and regulates them as a form of financial derivative rather than an avenue for gambling.
“The CFTC is a cop on the beat. It has the capacity to oversee this market, just as they’ve done with a broader commodities marketplace that has been around and well-versed for decades,” he said.
The Commodity Futures Trading Commission’s jurisdiction over prediction markets has been a contentious topic, since users can trade event contracts related to sports, weather, politics and more.
The Prediction Markets Are Gambling Act, which Sen. Adam Schiff, D-Calif., introduced in March, seeks to ban prediction markets from listing contracts that resemble sports bets, arguing that such contracts are considered gambling and should be subject to state regulation.
The agency argues that sports event contracts were treated as “swaps,” a term used to describe events that have potential economic consequences.
But Sen. Ted Cruz, R-Texas, pushed back against the classification of sports contracts on prediction markets as financial derivatives.
“What is the economic consequence of whether a pitcher throws a ball or strike?” he asked.
Another bill specifically targeting digital gambling advertisements to minors was introduced Monday. Sens. Richard Blumenthal D‑Conn., and Katie Britt, R‑Ala., are advocating the Gaming Advertisement to Minors Enforcement Act, which would implement a federal ban on sports betting ads on social media platforms for minors.

