Gaming Industry Unites Against Prediction Market “Gambling Loophole”

A coalition of more than 50 gaming associations, tribal governments and labor unions has urged the US Senate to amend the CLARITY Act with language explicitly barring sports and casino-style event contracts from prediction-market platforms, escalating a fight over who regulates betting in America.

The group submitted its letter on June 16, targeting the leading federal crypto market-structure bill as the most realistic vehicle to insert a sports-betting carve-out. 

Signatories include the American Gaming Association, the Indian Gaming Association and UNITE HERE, a union representing about 300,000 hotel, gaming and food-service workers across the United States and Canada.

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A Fight Over Jurisdiction

At the centre of the dispute is whether the Commodity Futures Trading Commission should oversee sports wagering at all. The coalition argues the agency “structurally lacks the authority and institutional infrastructure” to regulate nationwide sports betting, pointing to existing state and tribal systems built for the task.

“Sports betting falls outside the CFTC’s remit and cannot be offered through prediction market platforms,” the letter states. 

The concern is sharpest for tribal governments, who warn that a CLARITY Act without explicit carve-outs could effectively legalise nationwide sports betting through CFTC-registered platforms, bypassing the tribal-state compact system that currently governs where wagering is allowed and how the resulting revenue is shared.

Disputed Numbers and a Widening Battle

The coalition contends that prediction markets have engineered the largest expansion of gambling in U.S. history over the past 18 months, without voter approval, legislative authorisation or meaningful consumer protections. 

It claims states have lost roughly US$1 billion (AU$1.42 billion) in tax revenue since such contracts appeared, a figure prediction-market operators dispute.

The push comes as the CFTC, under chair Michael Selig, advances a 267-page proposal that would allow sports event contracts covering final scores, point differentials, win-loss results and player statistics —the very products platforms such as Kalshi and Polymarket have rolled out. 

It also runs parallel to the Prediction Markets Are Gambling Act, introduced in March by Senators Adam Schiff and John Curtis, which would bar CFTC-registered entities from listing sports or casino-style contracts.

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