TLDR
- Major casino industry organizations are pushing Congress to exclude sports and casino-related prediction markets from the Clarity Act legislation
- Industry representatives claim these platforms circumvent state-level gaming regulations by rebranding wagers as financial instruments
- The Clarity Act has cleared the Senate Banking Committee and awaits a full Senate floor vote
- State regulators have launched enforcement proceedings against Kalshi and Polymarket for alleged violations of gambling statutes
- The CFTC has initiated legal action against various states to maintain its regulatory authority over sports prediction platforms
A coalition of prominent gaming organizations—including the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers—has submitted a formal request to the Senate demanding that legislators prohibit sports and casino-related prediction markets from being included in the forthcoming cryptocurrency market structure legislation.
The correspondence contends that prediction market operators have facilitated the most significant proliferation of gambling activities in United States history—all without obtaining voter consent or appropriate legislative endorsement.
According to these organizations, the platforms provide coast-to-coast sports wagering through what they label as “sports event contracts” while positioning them as federally supervised financial instruments. This characterization, the coalition maintains, allows operators to circumvent state and tribal gaming regulations.
“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,” the letter stated.
The organizations also highlighted worries regarding youth participation. They contend the platforms provide insufficient responsible gaming safeguards while promoting gambling services as investment opportunities.
The Clarity Act and What Comes Next
The central legislative mechanism in question is the Clarity Act. The Senate Banking Committee approved its iteration of the legislation last month. A comprehensive Senate floor vote represents the subsequent stage.
The gaming coalition is requesting that Congress utilize the bill to establish that sports wagering exists beyond the CFTC’s regulatory scope and cannot be provided through prediction market operators.
Their correspondence further contended that the CFTC lacks the institutional design to oversee gambling or sports wagering operations, and doesn’t possess the necessary expertise and organizational framework to monitor nationwide sports betting activities.
The CFTC has responded with resistance. The regulatory body has filed lawsuits against multiple states—including Wisconsin, Illinois, Arizona, Connecticut, New York, and New Mexico—to preserve its jurisdictional authority over sports prediction platforms.
Last week, the CFTC unveiled new regulatory proposals that would authorize sports-related prediction markets while prohibiting wagers on terrorism, political assassinations, and military conflicts.
Kalshi and Polymarket Under Pressure
Kalshi and Polymarket represent the two dominant operators in the prediction market sector. Numerous states have already initiated enforcement measures against both platforms, charging them with breaching state gambling statutes.
In March, US senators Adam Schiff and John Curtis presented the Prediction Markets Are Gambling Act, which would prohibit prediction contracts connected to sports or casino-style entertainment from being offered on registered exchanges.
Kalshi generated $16.81 billion in monthly transaction volume in May, rising from $14.81 billion in April. Polymarket recorded $7.08 billion in May, declining from $9.01 billion in April.
The controversy surrounding regulatory authority over prediction markets—whether the CFTC or state gambling commissions—is now intrinsically linked to the outcome of the Clarity Act.
