The American Gaming Association (AGA) has intensified its campaign against sports prediction markets, labeling them as a significant risk to the regulated gaming landscape. This assertion is highlighted in the AGA's annual 'State of the States' report and a recent executive survey.
Despite the AGA's warnings, several prominent sportsbook operators are still venturing into the prediction market sector. In the latest 'State of the States 2026' report, the AGA draws parallels between prediction markets and unregulated gaming activities, such as sweepstakes casinos and illegal offshore sportsbooks.
Bill Miller, AGA President and CEO, emphasized the urgency of addressing the threat posed by these markets, stating, "We have rallied the industry and our partners to confront the increasing risk of prediction markets that operate outside established state and tribal gaming laws." He underscored that this issue is central to consumer protections, responsible gaming standards, and the fair allocation of tax revenues.
In the report's 'Illegal Gaming' section, the AGA categorizes prediction markets with other unregulated forms of gaming, noting that 16 states took measures against sports event contracts in 2025. These actions included cease-and-desist orders, lawsuits against operators, and regulatory opinions declaring such contracts as unauthorized sports wagering.
Additionally, five states—California, Connecticut, Montana, New Jersey, and New York—enacted laws in 2025 that explicitly ban sweepstakes casinos. While not mentioned in the report, Nevada also passed legislation that empowers regulators to take action against these platforms. In 2026, Indiana and Maine followed suit with their own prohibitions.
The AGA's messaging aligns with its earlier 'Gaming Industry Outlook Spring 2026' report, which identified prediction markets as a major threat, with 81% of gaming executives regarding them as a "very significant threat" to the regulated gaming sector. Furthermore, the report revealed that 46% of executives believe federal regulatory issues are hindering operations, a rise from 29% in the previous year, while 42% pointed to competition from new gaming formats as a limiting factor.
Concerns raised by executives included issues such as unregulated competition, the potential for further market expansion, and threats to industry credibility. The AGA estimates that illegal gambling results in an annual loss of approximately $53.9 billion, depriving states of over $15 billion in tax revenue. This figure does not account for the substantial sports wagering tax revenue lost due to prediction markets.
As the AGA ramps up its rhetoric, a noticeable divide has emerged within the industry, with major online gaming operators like DraftKings, FanDuel, Fanatics, and Bet365 distancing themselves from the AGA, citing differing strategic priorities and business models.