Key Highlights
The American Gaming Association, Indian Gaming Association and Association of Gaming Equipment Manufacturers sent a joint letter to the Senate asking lawmakers to add language to the CLARITY Act making clear that sports event contracts fall outside CFTC authority.
The gaming groups argue that prediction market platforms expose younger users to gambling products with fewer consumer protections than licensed sportsbooks, bypass state and tribal gaming laws that fund local tax revenue and community programs, and sit within a sector the CFTC was never designed to regulate.
The CFTC is simultaneously developing a new framework to review sports event contracts individually rather than imposing blanket bans, and has sued New Mexico after the state moved against prediction platform Kalshi, while a dozen other states have pursued their own enforcement actions against prediction market operators.
Three major gaming industry organizations have asked Congress to use the CLARITY Act, the leading crypto market structure bill in the Senate, to explicitly remove sports and casino-style prediction market contracts from the authority of the Commodity Futures Trading Commission. The letter, addressed to the Senate and reported by Semafor, was signed by the American Gaming Association, the Indian Gaming Association and the Association of Gaming Equipment Manufacturers. The groups argued that prediction market platforms have created the largest expansion of gambling in U.S. history without voter approval or legislative authorization by offering sports event contracts as federally regulated financial instruments, effectively bypassing the state and tribal gaming laws that govern traditional sportsbooks.
The gaming industry's core argument is jurisdictional. The CFTC was established to oversee derivatives markets, specifically instruments used to hedge commercial and financial risks, and the groups say it lacks the expertise and infrastructure to regulate nationwide sports wagering. The letter described prediction market platforms as providing substantially similar functions to licensed sportsbooks while operating under a looser federal framework that offers fewer responsible gaming protections, exposes younger users to gambling products with less oversight, and undercuts the revenue streams that tribal gaming operations use to fund community programs. Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act in March, a separate bill that would prohibit sports and casino-style prediction contracts from being listed on any registered platform.
The legal landscape around prediction markets has grown increasingly complex. Former CFTC Chair Gary Gensler told the Sixth Circuit Court of Appeals this month that sports prediction contracts do not fit the definition of swaps under the Dodd-Frank Act because they are not used to hedge economic or commercial risks. Gaming organizations have advanced similar arguments, with the Indian Gaming Association and affiliated tribal groups telling the same court that prediction markets interfere with tribal gaming systems established under federal law. At the state level, more than a dozen states including Ohio, Nevada, New Jersey, Maryland, Montana, Illinois, New York, Connecticut, Arizona, Wisconsin and New Mexico have challenged platforms such as Kalshi and Polymarket, arguing that their sports contracts must comply with state gambling laws. The CFTC pushed back directly by suing New Mexico after state officials moved against Kalshi, asserting that federally regulated event contracts fall under its exclusive jurisdiction through the Commodity Exchange Act.
While that jurisdictional fight plays out in courts, the CFTC is also building a positive framework for reviewing event contracts. Rather than imposing blanket restrictions across entire categories of markets, the agency is developing rules that would evaluate contracts individually against public-interest standards. Sports-related contracts tied to player injuries or specific in-game events would face heightened scrutiny, while contracts involving terrorism, assassinations or political violence would receive even closer examination. The Senate Banking Committee has already advanced the CLARITY Act and a full Senate vote remains the next major procedural step, giving the gaming industry a narrow window to push for the sports prediction market exclusion before the bill moves to a floor vote.
