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Read Full BioLawmakers in New York have introduced a new bill aimed at curbing the rise of sports prediction markets. The bill aims to prohibit operators from offering prediction markets on athletic events, in addition to a range of restrictions on platforms.
Assemblyman Clyde Vanel introduced Assembly Bill A9251, also known as the ORACLE Act (Oversight and Regulation of Activity for Contracts Linked to Events), on Friday. The terms of the bill state, “A prediction market platform provider shall not permit New York users to open a speculative position on the following types of markets:
- Catastrophic event markets;
- Political markets;
- Death markets;
- Security markets; and
- Athletic event markets.”
The Commodity Exchange Act (CEA), which regulates prediction market platforms, already includes a limit on the types of markets that can be offered. It states that companies may not open contracts on war, terrorism, unlawful activities, or gaming.
The Commodity Futures Trading Commission (CFTC) has not enforced this rule when it comes to markets on sporting events. It is therefore questionable whether passing a bill at the state level would have any effect on the operations of prediction market platforms, which claim federal oversight.
Vanel, however, disagrees that the markets are under the exclusive jurisdiction of the CFTC. He noted, “The State not only can regulate these markets, but they must.
“Here’s the blunt reality: if you want to run what is, in substance, a gambling platform in this state, you get a license. You open the books. You submit to oversight. You prove to the residents of every state you operate in that you actually care about whether they spend more than what they can afford, that you are providing them with resources to help with addiction, and that you have real guardrails against insiders harming them.
“Yet, prediction markets have done none of that. They’ve wrapped wagering in new jargon and skipped the hard part: licensure and accountability. That’s why states can’t look the other way.”
New York In Legal Battle With Prediction Market Platforms
Under current state laws, New York has already issued Kalshi and Robinhood cease-and-desist letters over offering sports markets. Kalshi responded by filing a lawsuit against the New York State Gaming Commission (NYSGC).
In the letter, the Commission highlighted the current laws in New York, which state, “No entity shall directly or indirectly operate an unlicensed sports wagering platform in the state of New York, or advertise or promote such unlicensed platform to persons located in the state of New York.”
It alleges Kalshi’s sports markets constitute unlicensed sports wagering. Kalshi, however, argues that the markets are legal under the CEA. The new legislation aims to provide clarity by explicitly declaring sports markets as forbidden under state law. Kalshi is likely to continue to claim that states have no authority over its operations and that federal law permits its markets.
Vanel voiced concerns that allowing the markets to continue under minimal regulation from the CFTC will create problems of insider trading, among other issues. He added, “We are already seeing extremely suspect cases where insiders are trading on embargoed information, we are seeing markets that can be influenced by single actors, and we are even seeing markets that relate to war, terrorism and natural disasters.”
Polymarket, which is set to relaunch in the US, has allowed users to trade on the timing of airstrikes in the Middle East, as well as whether the US will enter a civil war in the near future.
Bill Proposes Range of Restrictions
In addition to explicitly banning sports markets, the bill proposes several other restrictions on prediction market platforms, including:
- Age Restriction – Users must be at least 21 years old.
- Self-Exclusion and Problem-Gambling Protections: Users must be able to self-exclude and set deposit and time limits; platforms must display responsible-gambling messages and hotline information.
- Ban on Credit and Gift-Based Funding: Platforms cannot accept credit cards or loans to fund accounts and are prohibited from offering gift cards or vouchers for prediction markets.
- Advertising Restrictions: All ads must be truthful, not target minors or individuals who have self-excluded, and must include information about the gambling-help hotline.
- Transparency on Market Settlement: Platforms must clearly show how each market will be resolved and the sources used to determine event outcomes.
- Exclusion of Certain Participants: Insiders, platform employees, or others with access to non-public information are prohibited from participating in the markets.
- Licensing and Compliance Oversight: The New York Attorney General will have authority to issue regulations, investigate, and enforce compliance.
- Civil Penalties and Enforcement: The Attorney General can issue injunctions and fines of up to $10,000 per violation, and up to $1 million per day for continued illegal operation after an injunction has been issued.
The legislation would take effect one year after being passed, giving platforms time to plan how to comply with the new laws. The legislative session does not begin until January next year, meaning the earliest the new rules could come into force would be 2027.
New York Central to Prediction Markets
Major prediction market platforms are headquartered in New York. Kalshi, Robinhood, and Polymarket are all based in the Empire State. Additionally, DraftKings recently acquired the CFTC-licensed platform Railbird, which is registered in the state.
After acquiring the company, DraftKings announced that it will launch DraftKings Predictions, a dedicated prediction market platform focusing on states where sports betting has not yet been legalized. This would likely exclude New York.
Other New York-based companies are also planning to launch prediction markets, despite the unclear legal status. Cryptocurrency exchange Gemini, owned by the Winklevoss twins, announced plans to launch a platform that will offer sports as well as other markets.
Attorney Stephen Piepgrass said he expects the legal battles in New York to be pivotal for the future of prediction markets. In an interview with CasinoBeats, the lawyer stated that any decision will carry significant weight, which could influence the actions of other jurisdictions.
While the legal battles continue, New York City’s mayoral-elect Zohran Mamdani gave a passing endorsement to Kalshi and prediction markets, citing his own odds of winning the election in a campaign speech.
As markets become increasingly embedded in American culture, it may be harder to slow down their growth. Whether the latest attempt in New York has any sizable impact will be seen after lawmakers debate the issue next year. The bill has been referred to the Consumer Affairs and Protection Committee.
