They argue that prediction platforms have triggered the “largest expansion of the gambling industry” in US history without voter or legislative approval. Major gaming associations are now pushing back.
American gaming groups, including the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers, have called on the Senate to include provisions in the CLARITY Act that would ban sports and casino-style prediction markets.
Hot topic: Bitcoin Price Could Still Fall, But Bitwise CIO Says Top Matters More
The gaming industry believes prediction market operators are passing off bets as regulated financial products, bypassing state laws and tribal compacts while weakening consumer protections.
Why the Gaming Industry Is Pushing Back
In a letter, the groups argued that sports prediction platforms undermine “a system built on local control that supports jobs, generates tax revenue, and funds community priorities.” They also point out that the CFTC lacks the expertise and infrastructure to oversee sports betting and was never designed to regulate gambling.
The letter also highlights youth protection concerns, saying platforms offer inadequate responsible gambling mechanisms and present betting products as investments.
“Congress should use crypto legislation to reaffirm a simple principle: sports betting falls outside the CFTC’s authority and cannot be offered through prediction market platforms,” the letter states.
Read more: How the CLARITY Act Could Reshape US Crypto Trading
CLARITY Act and Regulatory Pressure
The CLARITY Act remains the primary crypto regulation vehicle. It passed the Senate Banking Committee last month and now awaits a full floor vote. The prediction market sector is facing mounting pressure. Several states have filed lawsuits against Kalshi and Polymarket. In March, Senators Adam Schiff and John Curtis introduced the “Prediction Markets Are Gambling Act,” which would ban trading in sports or casino-like contracts.
At the same time, the CFTC is defending its jurisdiction. The regulator has sued several states, including Wisconsin, Illinois, Arizona, Connecticut, New York, and New Mexico, challenging their attempts to regulate prediction market operators. Last week, the CFTC proposed new rules that would support sports prediction markets while restricting bets on terrorism, assassinations, and war.
Despite the regulatory pressure, trading volumes remain substantial. Kalshi posted $16.81B in monthly volume in May, up from $14.81B in April. Polymarket recorded $7.08B in May, down from $9.01B in April. Combined monthly volume on the two platforms exceeds $24B.
Learn more: Best Prediction Markets 2026 — Regulated Access, Crypto Liquidity and Risk Filters
