US gaming industry groups urge Senate to ban sports prediction markets in crypto bill: report

U.S. gaming groups are calling on lawmakers to include language in crypto market structure legislation that would explicitly ban prediction markets tied to sports and casino-style wagering, according to a Tuesday report from Semafor.

In a letter to the Senate cited by Semafor, the industry groups — including the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers — wrote that prediction markets have "fueled the largest expansion of gambling" in U.S. history without proper voter approval or legislative authorization.

"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 letter said.

The letter argued that prediction market platforms put younger users at risk by offering inadequate responsible gaming protections while presenting gambling products as investments. It also suggested that the Commodity Futures Trading Commission was not created to regulate gambling or sports wagering, as the agency "lacks both the expertise and the infrastructure to police nationwide sports betting."

"[Congress] 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 letter added.

The primary vehicle for crypto market structure legislation is the Clarity Act, which the Senate Banking Committee advanced last month. The next major hurdle for the bill is a vote by the full Senate.

The Block has reached out to the American Gaming Association for further comment.

Growing momentum

Prediction market platforms have gained significant traction during the 2024 elections and continue to draw participation ahead of this year's midterm elections.

Nonetheless, the burgeoning sector has drawn political and regulatory scrutiny. In March, U.S. senators Adam Schiff and John Curtis introduced the "Prediction Markets Are Gambling Act," seeking to bar prediction contracts tied to sports or casino-style games from being listed or traded on a registered platform. Multiple states have issued enforcement actions against major platforms Kalshi and Polymarket, accusing them of violating state gambling laws.

Meanwhile, the CFTC has moved to defend its jurisdiction over sports-related prediction markets in recent months, suing several states — including Wisconsin, Illinois, Arizona, Connecticut, New York, and New Mexico. Last week, the CFTC proposed a slate of rules that would support sports-related prediction markets, while limiting bets on terrorism, assassinations, and war.

Kalshi and Polymarket remain the dominant players in the prediction market sector. Kalshi recorded $16.81 billion in monthly volume in May, up from $14.81 billion in April, according to The Block's data dashboard. Polymarket posted $7.08 billion in volume last month, down from $9.01 billion in April.

Source: https://www.theblock.co/post/405030/gaming-industry-urges-congress-ban-sports-prediction-markets