What to know:
- Gaming groups urge senators to ban sports-linked prediction markets in crypto bill.
- The letter says platforms bypass state gambling laws through sports event contracts.
- The CFTC defends its role as states challenge Kalshi and Polymarket over wagering laws.
U.S. gaming groups are urging senators to block prediction market sports betting from crypto market structure legislation. Their request targets sports event contracts and casino-style wagers. The appeal comes as Congress weighs rules for digital assets and markets this week.
According to a Tuesday report from Semafor, major gaming groups sent a letter to the Senate. They called on lawmakers to incorporate plain terms in opposition to sports-related prediction contracts. The groups said that these products should not be regarded as financial instruments.
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Prediction Markets Sports Betting Draws State Law Concerns
In a letter to the Senate were the groups including the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers. They said prediction markets sports betting have expanded gambling without voter approval. They also reported it has progressed without the right state permit.
The groups contended that platforms provide sporting event contracts nationwide. The products are sold as federally regulated financial products, they said. They believe this configuration evades state and tribal gambling regulations.
The letter also focused on consumer protection. Younger users might encounter gambling-type products marketed as investments, it said. Weaker protections could put users at greater risk, the groups said.
The industry groups also challenged the Commodity Futures Trading Commission’s role. They said the CFTC was not designed to regulate sports betting or “casino-style” betting. They urged Congress to state that prediction markets and sports betting fall outside the agency’s remit.
The request is linked to the Clarity Act. The bill is the primary instrument for crypto market structure rules. It was advanced last month by the Senate Banking Committee.
The next step is a full Senate vote. This outcome could impact the operations of prediction markets. It might also influence the destiny of whether or not sports contracts stay under monetary law.
Lawmakers Push Back Against Sports Event Contracts
Prediction market sites became popular during the 2024 elections. Activity has continued ahead of this year’s midterm elections. That expansion has led to more scrutiny from lawmakers and regulators.
The Prediction Markets Are Gambling Act was introduced by Senators Adam Schiff and John Curtis in March. The bill aims to prevent registered platforms from sporting casino-style contracts. It shows rising concern over prediction markets, sports betting, and their legal status.
Multiple states have also taken action against Kalshi and Polymarket. The platforms were accused by regulators of being in violation of state gambling laws. Those cases have intensified the controversy over State and Federal power.
The CFTC has gone in the opposite direction. It has sued multiple states and is defending its jurisdiction over sports-related prediction markets. It also suggested provisions to facilitate sports contracts and to restrict contracts related to acts of terrorism, assassination, and war.
Kalshi and Polymarket are still the biggest players in the space. In May, Kalshi accounted for $16.81 billion in volume as Polymarket generated $7.08 billion. The figures show why prediction markets and sports betting have become a key issue in Washington.
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