Three major U.S. gaming industry organizations sent a joint letter to the Senate, demanding that pending crypto market structure legislation include explicit prohibitions on sports-related prediction contracts. The American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers signed the letter, arguing that prediction market platforms offer de facto gambling products while bypassing state and tribal gaming laws and consumer protection frameworks.
The groups warned that operators often market gambling products as “financial investments,” exposing younger participants to heightened risks because responsible gaming safeguards on these platforms are less developed. They stressed that such contracts have expanded nationwide without direct voter or legislative authorization. The letter also claimed that sports event contracts allow platforms to offer betting nationwide while sidestepping state and tribal gaming laws, weakening consumer protections and undermining tax revenue systems that support local communities.
Three Gaming Associations Target Crypto Bill
According to a report by Semafor, the letter urges the Senate to use the Clarity Act — the primary crypto market structure proposal currently before Congress — to explicitly prohibit sports-related prediction contracts and casino-style wagering. The Senate Banking Committee advanced the bill last month, moving it closer to a full Senate vote. Gaming groups see this as a window to draw a clear line: federal financial regulation should not serve as a backdoor for sports wagering.
Separately, Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act earlier this year, seeking to ban sports and casino-related prediction contracts on registered platforms. Bipartisan divisions on the issue are emerging, and the regulatory vacuum is pushing lawmakers to act.
CFTC Authority Under Fire
The gaming organizations also challenged the Commodity Futures Trading Commission's oversight authority over these products. They argued that sports betting falls outside the CFTC's intended jurisdiction and should be governed solely by state law. The CFTC, however, has been defending its role, filing lawsuits against several states — including Wisconsin, Illinois, Arizona, Connecticut, New York, and New Mexico — to preserve federal oversight. The agency recently proposed rules that would support sports-related prediction markets while banning contracts tied to terrorism, assassinations, and war. This conflicting stance has added further tension between the industry and regulators.
State Actions and Volume Divergence
Multiple states have taken enforcement actions against major operators Kalshi and Polymarket, accusing them of offering sports-related contracts to residents without proper authorization, violating local gambling laws. Despite regulatory pressure, both platforms continue to record substantial trading volumes. Kalshi reported $16.81 billion in trading volume in May, up from $14.81 billion in April. Polymarket recorded $7.08 billion in monthly volume, down from $9.01 billion the previous month. The prediction market boom fueled by the 2024 election cycle persists, with participation remaining elevated ahead of the upcoming midterm elections.