AGA, Tribal Gaming Groups and Racing Industry Send Congress Letter Demanding Prediction Markets Be Excluded From CFTC’s Jurisdiction

A broad coalition of gambling industry organizations — including the American Gaming Association, the Indian Gaming Association, the National Thoroughbred Racing Association, The Jockey Club, and dozens of tribal and labor groups — sent a letter to the U.S. Senate urging Congress to take legislative action against prediction market platforms that offer sports event contracts. The letter, submitted ahead of a vote on the Digital Market Clarity Act, calls on lawmakers to use cryptocurrency legislation as a vehicle to clarify that sports betting falls under state gaming regulators rather than the Commodity Futures Trading Commission.

The coalition’s central argument is that platforms like Kalshi and Polymarket have bypassed decades of state and tribal gaming law by classifying their sports contracts as CFTC-regulated derivatives rather than wagers subject to state oversight. The letter states: “By offering nationwide sports betting through so-called ‘sports event contracts’ and branding it as a federally regulated financial product, these platforms have bypassed state and tribal law, weakened consumer protections, and undercut a system built on local control — one that supports jobs, generates tax revenue, and funds community priorities.”

The Argument Against CFTC Jurisdiction

At the core of the coalition’s position is a jurisdictional dispute that has spilled into courts across more than a dozen states. The CFTC maintains it has exclusive authority over derivative markets including prediction market event contracts, and has responded to state enforcement actions against Kalshi and Polymarket by filing lawsuits against nine states. The gaming industry argues that Congress never intended the CFTC to serve as a national sports betting regulator when it passed the Dodd-Frank Act, and that the agency lacks the expertise and consumer protection infrastructure to do so effectively.

Chris Cylke, senior vice president of government relations at the AGA, has been among the most vocal advocates for congressional action. “There’s a very real question about how does this small agency effectively take on the role as a national sports betting regulator?” Cylke said. “We believe the answer is that they can’t.” The AGA and its allies want the Digital Market Clarity Act to include language explicitly placing sports event contracts outside the CFTC’s jurisdiction — a change that would shift regulatory authority back to individual states.

Dozens of federally recognized tribes have also filed legal briefs in various states arguing that prediction markets undermine the tribal gaming compacts and revenue-sharing agreements that fund tribal community services. For tribal nations, the stakes are existential: prediction market growth in states where tribal casinos hold exclusive gaming rights could erode the customer base that those compacts are built around.

The Industry’s Uphill Battle

The coalition faces a political environment that is not uniformly hostile to prediction markets. The CFTC under its current leadership has been a vigorous defender of its jurisdiction, and several members of Congress have publicly voiced support for keeping prediction markets within the federal framework. Kalshi and Polymarket have their own lobbying operations and have argued that state enforcement actions represent protectionist efforts by incumbent gambling interests rather than genuine consumer protection.

The rapid growth of the prediction market industry has also generated a powerful counternarrative. Monthly trading volume on Kalshi and Polymarket has climbed to nearly $220 billion, creating a large and growing constituency of users who value the products. Kalshi is currently in discussions for a funding round that would value it at $40 billion, and Polymarket continues to draw significant volume across political, entertainment, and sports markets.

Legal experts believe the jurisdictional question could eventually reach the Supreme Court regardless of congressional action. In the meantime, the coalition’s letter puts direct pressure on lawmakers to take a side in one of the gambling industry’s most consequential regulatory battles in years. For users of licensed sportsbooks, the outcome of this fight will help determine how the landscape looks when NFL season kicks off in September. The prediction markets sector is watching Congress closely.