Gaming Groups Push Senate to Ban Sports Prediction Markets in Crypto Bill

TLDR

• US gaming groups, including the American Gaming Association, are urging Congress to ban sports and casino-style prediction markets in the Clarity Act
• They argue prediction market platforms bypass state gambling laws by labeling bets as financial products
• The Senate Banking Committee has already advanced the Clarity Act; a full Senate vote is next
• Multiple states have taken enforcement action against Kalshi and Polymarket for violating state gambling laws
• The CFTC has been suing states to defend its jurisdiction over sports prediction markets

The American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers have written to the Senate asking lawmakers to ban sports and casino-style prediction markets from the upcoming crypto market structure bill.

The letter argues that prediction market platforms have driven the biggest expansion of gambling in US history — without voter approval or proper legislative authorization.

The groups say these platforms offer nationwide sports betting through “sports event contracts” while calling them federally regulated financial products. That framing, they argue, lets the platforms sidestep state and tribal gambling laws.

The groups also raised concerns about younger users. They argue the platforms offer inadequate responsible gaming protections while marketing gambling products as investments.

The Clarity Act and What Comes Next

The primary vehicle here is the Clarity Act. The Senate Banking Committee advanced its version of the bill last month. The next step is a full Senate floor vote.

The gaming groups are asking Congress to use the bill to confirm that sports betting falls outside the CFTC’s authority and cannot be offered through prediction market platforms.

Their letter also argued that the CFTC was not set up to regulate gambling or sports wagering, and lacks the expertise and infrastructure to police nationwide sports betting.

The CFTC has pushed back. The agency has sued several states — including Wisconsin, Illinois, Arizona, Connecticut, New York, and New Mexico — to defend its jurisdiction over sports prediction markets.

Last week, the CFTC proposed new rules that would support sports-related prediction markets while restricting bets on terrorism, assassinations, and war.

Kalshi and Polymarket Under Pressure

Kalshi and Polymarket are the two largest platforms in the prediction market space. Multiple states have already taken enforcement action against both, accusing them of violating state gambling laws.

In March, US senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act, which would bar prediction contracts tied to sports or casino-style games from being listed on registered platforms.

Kalshi recorded $16.81 billion in monthly volume in May, up from $14.81 billion in April. Polymarket posted $7.08 billion in May, down from $9.01 billion in April.

The debate over who regulates prediction markets — the CFTC or state gambling authorities — is now directly tied to the fate of the Clarity Act.

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