AGA and IGA Urge Congress to Bar Prediction Markets From Offering Sports Betting Under Federal Cover

The American Gaming Association and the Indian Gaming Association sent a joint letter to Congress on Friday, May 16, calling for explicit legislative language to prohibit prediction market platforms from offering sports betting and casino-style gambling nationwide through federally registered exchanges. The letter, signed by AGA President and CEO William C. Miller Jr. and IGA Chairman David Z. Bean, targeted the ongoing debate around the Digital Asset Market CLARITY Act and urged lawmakers to seize the moment to draw a clear jurisdictional line.

The two trade groups argue that the majority of prediction market activity now involves sporting event contracts that operate outside state and tribal gaming frameworks. Without federal intervention, they contend, platforms like Kalshi and Polymarket are effectively offering nationwide sports wagering without the licensing requirements, consumer protections, or tax obligations that govern licensed sportsbooks in regulated states.

What the Letter Asks of Congress

The AGA and IGA letter specifically called on lawmakers to include language in cryptocurrency market structure legislation making it unambiguous that sports betting and casino-style gambling cannot be conducted through Commodity Futures Trading Commission-registered platforms under the label of event contracts. The groups argued that this classification has allowed prediction market operators to exploit the CFTC’s regulatory authority while undermining state law and tribal sovereignty over gambling activity.

The letter pointed to the introduction of the bipartisan Prediction Markets Are Gambling Act, which would ban live-event wagering on prediction platforms entirely, as evidence of growing congressional concern. It also cited the Senate’s recent vote to prohibit its own members and staff from trading on prediction market platforms as a sign that lawmakers are beginning to recognize the regulatory stakes.

The AGA separately disclosed that it spent $730,000 lobbying on prediction markets legislation in the first quarter of 2026 alone, its heaviest single-quarter expenditure on the issue in more than a year. The group has written to major sports leagues discouraging partnership agreements with prediction market operators and has filed comments with the CFTC opposing the agency’s position that it holds exclusive jurisdiction over event contracts tied to sporting outcomes.

Broader Legislative Picture

The prediction markets debate is now moving toward a critical legislative juncture. Senator Marsha Blackburn’s Commerce Subcommittee on Consumer Protection, Technology and Data Privacy has scheduled a formal hearing on prediction markets for May 20, the first time any Senate body has convened to directly address the sector’s rapid expansion and its intersection with sports wagering. The hearing is expected to weigh testimony on competing legislative proposals, including both the outright ban contained in the Prediction Markets Are Gambling Act and the lighter-touch registration framework in the Prediction Markets Security and Integrity Act of 2026, which the AGA has endorsed as a fairer competitive baseline.

A coalition of 41 state attorneys general has also written to Congress urging regulatory clarity, adding substantial state-level weight to the push for federal action. The CFTC itself has filed legal complaints against several states that have attempted to enforce their own gambling laws against prediction exchanges, asserting its exclusive jurisdictional authority — a claim that the Ninth Circuit is expected to rule on in the coming weeks.

For the regulated sports betting industry, the stakes are significant. Platforms operating under CFTC oversight are not required to pay state gaming taxes, comply with problem gambling mandates, or obtain the licenses that cost operators tens of millions of dollars in states like Pennsylvania and New York. The AGA and IGA contend that this asymmetry, if left unaddressed, threatens the integrity and financial viability of the regulatory frameworks that states and tribes have built over nearly a decade since the Supreme Court struck down PASPA in 2018. Readers who want to understand how prediction markets differ from traditional wagering can explore the prediction markets vs. sports betting breakdown, and those tracking platform developments can review Kalshi and Polymarket directly.