The American Gaming Association (AGA) and the Indian Gaming Association (IGA) sent a letter to Congress, asking them to prevent prediction markets from offering gambling products that impinge on state and tribal gaming laws.
Key Takeaways
- The number of prediction market operators has grown over the last 18 months.
- The majority of prediction market activity involves sporting event contracts, unlicensed and unregulated at the state and tribal levels.
- The AGA and IGA are requesting Congress to reaffirm state and tribal rights over gambling related activity.
William C. Miller Jr., American Gaming Association (AGA) president and CEO, and David Z. Bean, Indian Gaming Association (IGA) chairman, sent a joint letter to Congress on Friday.
As Congress considers the Clarity Act, the AGA and Indian Gaming Association are urging lawmakers to include explicit language clarifying that prediction market platforms cannot offer nationwide sports betting and casino-style gambling. Read the letter we sent to Congress ⤵️ pic.twitter.com/mwiiA1Agvj
— American Gaming Association (@AmericanGaming) May 15, 2026
Congress is in the process of passing the Digital Asset Clarity Act, a bill that would grant the Commodity Futures Trading Commission (CFTC) jurisdiction over digital assets such as cryptocurrencies and stablecoins. On Thursday, the Senate Banking Committee voted 15-9 to move the bill to the Senate floor.
Enjoying Covers content? Add us as a preferred source on your Google accountWith CFTC regulations open for Congressional debate, the AGA and IGA are requesting that legislators include “explicit language to make it crystal clear that sports betting and casino-style gambling cannot be conducted nationwide through federally registered platforms under the guise of ‘event contracts.’”
Background
In 2018, the U.S. Supreme Court overturned a law that had prevented states from legalizing sports betting. The decision opened the door for legalized sports betting at the state level. Currently 39 states and Washington D.C., have some form of legalized sports betting. The sector is highly regulated, with strict rules governing licensing, advertising, and consumer protection.
Prediction markets are regulated at the federal level by the CFTC. Traditionally, they offered contracts based on the outcome of financial and political events. In early 2025, however, prediction market operator Kalshi started offering sporting event contracts. Other prediction markets soon followed suit. Additionally, a number of leading sports betting companies launched their own prediction market products, thereby avoiding the state and tribal taxes incurred by their traditional sports betting business.
Prediction market sports contracts mimic sports bets in many ways, including the ability to trade on props and parlays. According to Kalshi’s General Counsel and Chief Regulatory Officer Rick Heaslip, sports event contracts currently make up roughly 70% of Kalshi’s trading volume.
Since state and tribal laws prohibit gambling that is unlicensed and unregulated by their jurisdictions, state and tribal authorities are actively challenging the legality of some prediction market products. The prediction market news is rife with dozens of lawsuits between state and tribal authorities and prediction market operators.
Shifting sentiment
Historically, the CFTC had prohibited sporting event contracts. But that changed with the current federal administration, which has ties to the prediction market sector. The AGA and IGA letter points out that it has been “abundantly clear in recent months that the CFTC has no intention of enforcing its longstanding rules that prohibit sports betting contracts ...”
The AGA and IGA had written Congress earlier this year. But they felt that a follow-up was warranted given the pending Clarity Act and some movement in Congress that suggests a growing recognition of risks associated with prediction markets. The letter highlights the recent decision by the Senate to ban members and staff from trading on prediction market platforms. It also cites the introduction of the bipartisan Senate bill, the Prediction Markets Are Gambling Act, which would prevent prediction markets from offering sporting event contracts and casino-style games.
