Prediction markets just got a new regulatory proposal to chew on. Rep. Josh Gottheimer (D-NJ) introduced the Facial Recognition to Protect Children Act on July 15, requiring online sportsbooks and prediction markets to deploy facial recognition technology for age verification. And in a move that might surprise those accustomed to platforms fighting regulation tooth and nail, Kalshi is publicly backing it.

The bill, which has bipartisan co-sponsorship from Rep. Jeff Van Drew (R-NJ) among others, would require platforms to use facial analysis to estimate a user’s age at login or when placing a wager. The legislation explicitly prohibits storing identity or biometric data, which sidesteps the most obvious privacy objections before they even get started.

Why Kalshi wants this regulation

Kalshi CEO Tarek Mansour framed the legislation as common sense, calling the protection of children “a no-brainer” and arguing that an industry-wide standard is necessary. Kalshi, as a CFTC-regulated entity, already maintains a self-regulatory framework that includes age verification measures. A federal mandate that forces every competitor to match those standards doesn’t exactly hurt Kalshi’s competitive position.

Mansour’s framing that “responsibility for implementing age verification cannot rest with a single entity” reinforces this. He’s essentially saying: we shouldn’t be the only ones spending money on this.

The youth gambling problem driving the bill

The legislation didn’t emerge from thin air. According to data from Common Sense Media cited in the bill’s supporting materials, nearly 36% of boys aged 11 to 17 have engaged in some form of gambling. Meanwhile, the US sports wagering market has become enormous. Total wagers reached approximately $160 billion last year, generating around $16 billion in revenue.

Gottheimer has a track record on child safety and age verification issues, making this bill a natural extension of his legislative portfolio. Advocacy groups like ParentsRISE have endorsed the bill.

What this means for the prediction market industry

If the Facial Recognition to Protect Children Act becomes law, every prediction market operating in the US would need to integrate facial analysis technology into their onboarding and wagering flows. The legislation applies nationally to online sportsbooks and prediction markets, which means there’s no state-by-state arbitrage opportunity.

The privacy-conscious design of the bill, with its explicit prohibition on storing biometric data, preempts the most potent counterargument that civil liberties groups would deploy. By requiring facial analysis for age estimation only, without creating a database of user biometrics, the bill threads a needle that similar proposals have historically missed.

For crypto-adjacent prediction platforms, which have historically leaned on pseudonymity as a feature, this kind of legislation represents a philosophical challenge as much as a technical one. Facial recognition age checks are fundamentally at odds with the anonymous, permissionless ethos that many decentralized platforms were built on. The regulated players like Kalshi are betting, quite literally, that the future of prediction markets runs through compliance rather than around it.