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German B2C and B2B transactional portals run on the framework we are developing! US legislative developments in gambling and prediction markets
US Legislative Developments in Gambling are moving in two directions at once, and together they show where the US online betting debate is heading next. In Washington, Nevada Rep. Dina Titus has introduced a federal bill aimed squarely at prediction markets that look and feel like sports betting. In statehouses, Illinois lawmakers are trying to unwind a new per-wager tax that appears to have cooled online handle, while New Jersey senators are pushing a package of responsible gambling restrictions focused on marketing, payments, and how operators treat at-risk customers.
Individually, each proposal targets a specific pressure point. Collectively, they reflect a market wrestling with the same core question, what counts as gambling, who should regulate it, and how far the rules should go in shaping consumer behavior.
Why prediction markets are now in the legislative crosshairs
Rep. Dina Titus introduced the Fair Markets and Sports Integrity Act to prevent prediction markets from facilitating wagers on sporting and casino-style events. The bill is framed as a response to a loophole, where platforms use event contracts to sell financial instruments that replicate sports betting or gaming, while avoiding state gaming rules.
At the heart of the debate is jurisdiction. Prediction market operators have argued that their products are swaps regulated by the Commodity Futures Trading Commission, or CFTC. Titus’ bill pushes back by treating these offerings as gaming, and seeks to hold those involved to the same standards as sportsbooks, including state-level licensing and age verification.
One of the clearest lines in the proposal is the ban it would impose on contracts tied to sports outcomes. Under the plan, any dealings involving contracts based on the outcome of professional or amateur sports would be prohibited.
The growth story that made this unavoidable
This legislative push is not happening in a vacuum. Platforms like Kalshi and Polymarket have expanded beyond political and economic forecasting, and sports and culture-adjacent markets are now part of the conversation. Kalshi, for example, said it processed more than $1bn in transactions on 9 February during Super Bowl LX, which the company described as a new record and a 2,700% rise from last year. For comparison, the legal US sports betting market was projected to take about $1.76bn in wagers on the event.
Kalshi also claimed it ranked alongside Peacock, which broadcast the game, and NBC in App Store downloads that day, according to Kalshi co-founder and CEO Tarek Mansour. Even so, Mansour noted that heavy traffic delayed some customer deposits, an operational detail that underscores just how quickly these products are scaling.
The more these exchanges resemble mainstream consumer betting apps, the harder it becomes for lawmakers and regulators to ignore the overlap with sports wagering, especially in states where sports betting remains prohibited and yet similar event-based products may still be accessible through a federal framework.
Sports integrity and the insider trading problem regulators cannot wish away
Another accelerant is integrity. The reporting around Titus’ bill notes that, while insider trading is not explicitly addressed, the legislation could help curb what some consider rampant insider trading on prediction markets. That concern intensified after remarks by the Polymarket CEO suggesting insider trading could be “healthy,” prompting Kalshi to distance itself and emphasize that it has measures in place.
On CNBC’s Squawk Box, hosts questioned how any market can prevent abuse when outcomes may be known in advance by people close to an event. Examples included performers and production staff with knowledge of a Super Bowl set list, or corporate executives aware of remarks before an earnings call. Mansour said Kalshi verifies identities, monitors for unusual patterns, investigates suspicious activity, and prohibits trades based on material non-public information, with violations potentially leading to fines or referral to the CFTC. He also acknowledged how complex it is to define what is material non-public information in event contracts, while the CFTC considers additional rulemaking to clarify insider trading standards for prediction markets.
That combination, explosive consumer growth plus unresolved integrity questions, is the context in which a federal bill that seeks to close the sports contract loophole becomes politically legible.
Illinois is reconsidering a per-wager tax after handle declines
While Washington debates whether prediction markets are gambling, Illinois is dealing with a more traditional policy lever, tax. House Bill 5143, introduced on 10 February by Rep. Daniel Didech, aims to repeal Illinois’ per-wager charge on online and mobile bets starting 1 July 2026. The proposal would amend Section 25-90 of the Illinois Sports Wagering Act and would take effect upon approval.
Illinois already runs a graduated tax on adjusted gross sports wagering receipts for internet and mobile betting that began 1 July 2024. Rates range from 20% on the first $30m in annual adjusted gross receipts to 40% on receipts above $200m. The same tiered structure applies to retail sportsbooks operating outside online platforms.
The per-wager assessment is the newer layer, and the one lawmakers are now questioning. It took effect on 1 July 2025 and requires licensees to pay $0.25 on each of the first 20 million combined Tier 1 and Tier 2 wagers in a fiscal year, and $0.50 on each wager beyond that threshold. This assessment applies only to online and mobile wagers, and it is in addition to the percentage-based tax and other statutory fees.
Support for repeal is being fueled by market performance signals. The article notes that last October total wagers statewide fell 15%, matching a similar decline in September. Both months followed the tax increase and showed a drop in online betting volume, while other states with legal online sports betting did not report a comparable decline.
Why per-wager fees hit online betting differently
A per-wager levy behaves differently from a tax on adjusted gross receipts. It taxes activity, not profitability, which can raise the effective cost of low-stake, high-frequency products. In practice, it can pressure operators to adjust pricing and promotions, or reconsider market coverage, particularly in highly competitive metros.
In Illinois, operators have explicitly raised the risk of consumer migration. Several sportsbook operators privately warned they might suspend service for Chicago customers ahead of the college football bowl games and the NFL playoffs. They continued operating after discussions with city officials, but a related lawsuit remains unresolved. Operators have also argued that higher costs could push bettors toward offshore platforms operating outside US regulation, which would shift activity out of the taxable market and potentially reduce the revenue gains lawmakers expected.
If enacted, HB 5143 would remove the per-wager levy after 1 July 2026, while keeping the graduated receipts tax intact. The policy subtext is clear, Illinois is testing where the tipping point lies between maximizing tax yield and maintaining a healthy, regulated online betting channel.
New Jersey targets responsible gambling through marketing and payments
New Jersey lawmakers are moving in a different direction, aiming to reshape the customer experience through rules on communication, funding methods, and incentive design. Several bills are under consideration by the Senate State Government, Wagering, Tourism & Historic Preservation Committee, and together they would require meaningful changes to operator marketing and payment systems.
Senate Bill 3401, sponsored by Senator Andrew Zwicker, would prohibit online casino and sports wagering licensees from using push notifications or text messages to urge users to wager or to make financial transactions. The bill sets a fine of at least $500 for every promotional message sent via a mobile device. It defines a push notification as an automatic electronic message received when the betting site or app is not open, and lawmakers said the goal is to reduce high volumes of direct digital solicitation that may contribute to impulsive wagering.
Senate Bill 3461 would ban the use of credit cards to fund online gaming and sports betting accounts, while allowing deposits via debit cards and electronic wallets. It also requires operators to designate a responsible gambling lead to oversee risk detection and intervention protocols, formalizing accountability at the operational level.
Two additional measures focus on account management. SB 3419 would require a licensee to publish clear rules on account limits, inform customers in writing when accounts are limited, and explain why. SB 3420 would prohibit bonuses, promo credits, or other incentives for customers who have activated responsible gaming features such as deposit limits or time-outs.
These proposals are being discussed against the backdrop of continued growth in the state’s online gaming economy. New Jersey online gaming revenue reached $273.2m last December. The bills also sit within a broader state conversation about tighter controls, with pending discussions mentioned in the article around micro-betting prohibitions and sports integrity hotlines.
What these New Jersey bills signal about where RG is going
Responsible gambling regulation is shifting from static tools to behavioral friction, and New Jersey’s approach illustrates that pivot. Rather than only encouraging players to self-manage, lawmakers are focusing on mechanisms that can amplify impulse.
- Marketing restrictions are designed to reduce persistent prompts to wager, especially when an app is not actively open,
- payment restrictions aim to limit a specific funding method, credit, that can disconnect gambling spend from immediate affordability,
- incentive restrictions attempt to prevent promotions from undermining a user’s choice to activate safer play settings.
For operators, this is not just a compliance update. It changes lifecycle marketing tactics, payment funnel conversion, and retention mechanics, all of which are central to online casino and sportsbook growth models.
One theme connects all three stories, the fight over regulatory edges
These US legislative developments in gambling are best understood as a contest over edges, at the border between finance and gaming, at the boundary between tax maximization and channel health, and at the line where marketing meets consumer protection.
Rep. Titus’ Fair Markets and Sports Integrity Act is effectively a boundary-drawing exercise. It argues that if a product functions like wagering on sports, it should be regulated like sports wagering, even if it is packaged as an event contract within the CFTC’s framework. That stance will likely draw scrutiny from the financial technology sector, which has advocated for unified federal oversight rather than a 50-state patchwork.
Illinois’ HB 5143 is about the economic edge of regulated markets. If the per-wager assessment coincides with declines that other states are not seeing, lawmakers have to decide whether the policy is extracting too much friction from a competitive online environment, and whether that friction risks sending players to offshore alternatives.
New Jersey’s Senate bills focus on the behavioral edge. They assume that how operators communicate and how users fund accounts materially affects risk, and they seek to put guardrails where high-frequency digital engagement meets impulsive wagering.
What to watch next
From an industry perspective, the near-term impact will depend on how far each proposal progresses, but the strategic implications are already visible.
On prediction markets, the key watch item is whether federal lawmakers and the CFTC move toward clearer definitions for event contracts, including how insider trading standards apply. Titus’ bill also raises a practical question for operators, can they scale consumer-facing sports-like products without triggering state licensing expectations and sports integrity concerns.
In Illinois, the data point lawmakers will likely keep returning to is the post-tax decline in wagers and whether that softness persists. If it does, the repeal effort becomes a referendum on whether per-wager assessments are compatible with long-term online sports betting growth.
In New Jersey, the operational implications will be immediate if the bills advance. A ban on promotional push notifications and texts, a prohibition on credit cards, and restrictions on promos for users who have activated responsible gaming tools would force changes in CRM strategy, payments orchestration, and player segmentation. For a state that continues to post strong online gaming revenue numbers, the legislative message is that growth does not exempt the market from tighter consumer safeguards.
The bigger picture for the US online gambling market
The US has long been defined by state-by-state gaming regulation, but digital products keep testing where those borders hold. Prediction markets, in particular, expose friction between federal financial oversight and state gaming policy. At the same time, mature online markets like New Jersey are showing that the policy conversation is moving beyond legalization and revenue, toward the design details of digital gambling experiences.
For readers tracking US legislative developments in gambling, these proposals are not isolated headlines. They are signals of a market entering a more complex phase, one where lawmakers scrutinize product structure, tax architecture, and the psychology of acquisition and retention, all at once.
