U.S. lawmakers grilled representatives of sportsbook and prediction market companies about their aggressive marketing tactics and the cheating allegations that have plagued sports leagues in recent months, as advocates for more stringent regulation drove home the pitfalls of legalized gambling.

The Senate Commerce subcommittee hearing on Wednesday comes as athletes, from college basketball to the major leagues, face accusations that they rigged games for financial gain, and as states try to put guardrails on prediction markets.

Committee chair Ted Cruz (R-Texas.) raised two key questions before the panel: “First, in a world where sports betting exists, how do we preserve the integrity and authenticity of the sports that we love? And second: Are prediction markets operating within the law, or are they defying the law and improperly infringing on state sovereignty?” he said.

Cruz pointed to recent high-profile instances of alleged game tampering, including two MLB pitchers accused of taking bribes in exchange for adjusting their own throws. He also noted the cancellations of UFC fights due to suspicions of match fixing.

“These incidents sow doubt in the minds of fans,” he said. “That is why sports leagues, and casinos, and regulators have to work together to identify, to investigate and to root out manipulation.”

Other lawmakers questioned the advertising techniques of prediction market companies, such as the popular Kalshi and Polymarket platforms. The fast-growing platforms allow anyone 18 and older to legally bet on topics as benign as phrases a particular celebrity might make at an event, to the more macabre, such as predictions surrounding the assassination of Iran’s Ayatollah Ali Khamenei.

Sen. John Hickenlooper (D-Colo.) raised concerns that the companies’ social media ads could reach young people who are particularly at risk of getting sucked into problem gambling. Patrick McHenry — a former Republican congressman and current senior adviser for the Coalition for Prediction Markets — told the committee that the sites ban bettors under 18 years old and that the average age of users is 33. Sportsbooks require bettors to be 21.

Online sports betting has seen explosive growth in recent years, with 39 states and D.C. having legalized some form of mobile sports gambling, after a 2018 Supreme Court decision opened the door for states to legalize online sports gambling. Sports betting revenue hit a record $16.96 billion in 2025, according to the American Gaming Association.

But the recent cheating scandals, as well as concerns over gambling addiction, have led to calls for additional scrutiny over the industry.

Harry Levant, director of gambling policy at the Public Health Advocacy Institute, outlined those concerns to the Senate subcommittee. He pointed to his own history of problematic gambling as evidence of how the practice can spiral for some.

“This is not a Republican issue or a Democrat issue. This is a human issue regarding an addiction crisis that needs to be addressed and prevented,” he said.

But Bill Miller, CEO of the American Gaming Association, argued that online gambling was already one of the most closely regulated American industries and called his sector “an essential part” of the U.S. economy.

Minnesota this week became the first state to ban prediction markets from operating inside its borders, setting the stage for a heated legal battle with the Trump administration. More than a dozen other states have introduced bills attempting to crack down on the platforms, according to the National Conference of State Legislatures.

Prediction market companies argue that they should be overseen by the federal government and classified as a financial product known as a “futures contract,” not as gambling services. The Trump administration has supported this view, suing states that have attempted to rein in the industry.

In his remarks to the committee Wednesday, McHenry argued that attempts to regulate prediction markets like traditional gambling proves a fundamental misunderstanding of the industry.

“In a casino or sportsbook, the house sets the odds and profits when customers lose. In a prediction market exchange, participants trade with one another, while the platform earns transaction fees for facilitating the market,” McHenry said. “As a result, the incentives are fundamentally different: Prediction markets benefit from greater participation, liquidity, and more accurate information, not from consumers losing money.”