U.S. Lottery Group NASPL Calls for Increased Regulation of Prediction Markets

A major U.S. lottery trade group has escalated its campaign against sports-style prediction markets, calling on federal regulators to move faster to define — and rein in — the fast-growing sector. The North American Association of State and Provincial Lotteries (NASPL) published a statement this week arguing that sports contracts offered on prediction market platforms represent “an attempt to create a new type of gambling and conceal its true identity.”

The statement, which builds on similar concerns raised earlier this year by the World Lottery Association, calls for a functional and economic test to determine what counts as gambling: if a product pays out based on the outcome of a sporting event, political race, or other real-world occurrence, NASPL argues it should be licensed and regulated as a wager regardless of what the operator calls it.

Lotteries Warn of Fallout for Integrity and Public Funding

NASPL’s statement lays out several specific concerns beyond simple market competition. The group warned that failing to establish clear regulatory parameters for prediction markets “will have a negative impact on the integrity of the very games — sports as well as lottery — that prediction markets target,” while also compromising consumer protection and responsible gambling efforts nationwide.

The trade group additionally flagged public funding as a stake in the debate. State lotteries typically direct a portion of revenue toward education and other public programs, and NASPL argues that unregulated prediction markets siphoning off betting activity could undermine those funding streams. The statement also raised law enforcement concerns, saying the current regulatory gap “compounds the challenges law enforcement faces in combatting tax evasion, money laundering and racketeering.”

Where the CFTC Currently Stands

The federal regulator at the center of the dispute, the Commodity Futures Trading Commission, has been actively reshaping its approach to event contracts throughout 2026. In March, the CFTC’s Division of Market Oversight issued a staff advisory reminding designated contract markets of their obligations under the Commodity Exchange Act, while the Commission separately published an advance notice of proposed rulemaking (ANPRM) seeking public comment on how existing rules should apply to prediction markets, including sports-related contracts.

Under CFTC Chairman Michael Selig, the agency has taken the position that it holds exclusive jurisdiction over event contracts listed on federally regulated exchanges, a stance that has put it in direct conflict with several state gaming regulators who argue sports-outcome contracts are functionally sports betting and should fall under state gambling law instead. That jurisdictional fight is currently playing out in courts across multiple states even as the CFTC’s rulemaking process continues.

The ANPRM touches on core issues such as whether sports event contracts are “readily susceptible to manipulation,” what settlement data sources should be considered reliable, and how definitions like “gaming” under the Commodity Exchange Act should be applied. Regulatory attorneys tracking the process have noted the agency appears to favor a “minimum effective dose” approach rather than a sweeping overhaul, focusing instead on how existing law applies rather than writing entirely new rules.

A Growing Chorus of Opposition

NASPL’s statement adds another influential voice to a lobbying effort that already includes commercial casino operators, professional sports leagues, and now lottery regulators, all pushing the CFTC and state legislatures toward tighter oversight of platforms like Kalshi and Polymarket that offer sports-outcome contracts. The lottery industry’s involvement is notable given that lotteries and prediction markets increasingly compete for the same discretionary consumer dollar, particularly around major sporting events.

Bettors following the prediction markets space should expect the regulatory back-and-forth to continue well into next year. Public comments on the CFTC’s ANPRM are already shaping the framework the Commission will eventually propose, and further statements from state lottery groups, sports leagues, and gaming regulators are likely as the jurisdictional questions work their way through both Washington and the courts. For now, platforms continue operating largely under the CFTC’s current posture, while critics like NASPL push for the “wager” label — and the licensing requirements that come with it — to apply industry-wide.

Anyone weighing whether to explore the space in the meantime can compare how these platforms stack up against traditional options in a prediction markets vs. sports betting breakdown, or check which states currently allow access through a prediction markets legality guide.