A broad coalition representing the gaming industry, tribal operators, and labor unions is calling on Congress to crack down on prediction market platforms through pending cryptocurrency legislation, escalating a growing battle over the future of sports-event contracts in the United States.
According to a letter released on June 16, organizations including the American Gaming Association (AGA), the Indian Gaming Association, the AFL-CIO’s Hotel and Gaming Trades Council, and UNITE HERE urged lawmakers to include language explicitly preventing prediction market operators from offering sports-related wagers.
The vehicle they have in mind is the CLARITY Act, the crypto market-structure bill now moving through Congress — legislation that does not directly address prediction markets, but which critics warn could indirectly strengthen the operators’ federal footing.
The coalition argues that platforms such as Kalshi have effectively expanded sports betting nationwide without going through traditional state licensing and regulatory frameworks.
Coalition warns of unregulated gambling expansion
In the letter, the groups said prediction markets have rapidly expanded gambling activity across the country without voter approval or legislative authorization.
“While our organizations may differ on other issues, including gambling policy, we are united in our concern that prediction markets have fueled the largest expansion of gambling in U.S. history over the past 18 months — without voter approval or legislative authorization,” the coalition wrote.
The organizations contend that prediction market contracts tied to sporting events function similarly to sports betting products but operate under federal commodities regulations rather than state gambling laws.
Push to clarify CFTC authority
A central focus of the coalition’s request is the role of the Commodity Futures Trading Commission (CFTC).
The groups are urging Congress to use upcoming crypto legislation to clearly establish that sports betting does not fall within the CFTC’s regulatory authority and should not be offered through prediction market platforms.
“Congress should not wait while this nationwide expansion of gambling continues,” the letter stated. “It should use crypto legislation to reaffirm a simple principle: sports betting falls outside the CFTC’s remit and cannot be offered through prediction market platforms.”
The fight is already in the courts
The coalition’s appeal lands atop a sprawling legal battle. Kalshi has fought state regulators across the country over its sports event contracts, and the results have been mixed but increasingly favorable to the platform: in April, a federal appeals court affirmed the CFTC’s exclusive jurisdiction over Kalshi’s contracts, blocking New Jersey from enforcing its gaming laws. The CFTC has gone on offense too, suing states such as Rhode Island and New York to stop them from applying gambling rules to federally registered exchanges.
Tribal governments in California and Wisconsin have separately sued Kalshi under the Indian Gaming Regulatory Act, and a bipartisan coalition of 41 state attorneys general has written to Congress urging federal clarity. President Donald Trump has weighed in as well, backing the CFTC’s exclusive jurisdiction over the sector.
Industry claims states are losing revenue
The American Gaming Association has previously argued that prediction markets are diverting activity away from regulated state sportsbooks.
Last month, the AGA estimated that states have lost approximately $1 billion in potential revenue to prediction market platforms since the beginning of 2025.
Prediction market operators have disputed those figures and maintain that their products are federally regulated financial contracts rather than traditional gambling offerings.
Supporters of prediction markets argue the platforms provide valuable price discovery and forecasting tools, while critics contend they create a regulatory loophole that allows sports wagering outside established state frameworks.
A Senate ban is already on the table
The coalition’s push reinforces an existing legislative effort. In March, Senators Adam Schiff (D-CA) and John Curtis (R-UT) introduced the Prediction Markets Are Gambling Act, the first bipartisan Senate measure to bar CFTC-regulated platforms — including Kalshi and Polymarket’s U.S. exchange—from listing contracts tied to sports and casino-style games. It is one of at least six bills targeting prediction markets introduced in 2026, and it strikes directly at the sector’s dominant revenue category, with sports the bulk of the more than $13 billion in monthly transactions the markets process.
With lawmakers already considering stricter transparency and compliance requirements for prediction market platforms, the latest intervention from gaming groups, tribal organizations, and labor unions adds fresh pressure on Congress to define where prediction markets fit within the U.S. regulatory framework.
As the CLARITY Act advances, the gaming coalition is betting that the must-pass crypto bill is the place to settle the question — a strategy that could determine the future relationship between digital asset markets, derivatives regulation, and sports wagering in the United States.
