The new legislation intensifies an ongoing battle between federal regulators and state authorities over prediction markets. Platforms like Kalshi and Polymarket argue their contracts fall under federal derivatives law, while many states insist they function as unlicensed gambling operations.

More than 20 states have already taken legal action, highlighting the uncertainty around jurisdiction. As the debate grows, the outcome could reshape how prediction markets operate in the U.S., especially in sectors like sports betting where regulatory boundaries remain unclear.