Prominent organizations within the U.S. gambling sector have urged Congress to implement a ban on prediction market platforms that offer contracts related to sports events. They contend that these offerings represent unregulated sports betting, which poses a risk to the established framework of regulated gaming in the country.
In a letter addressed to the Senate, the American Gaming Association, along with the Indian Gaming Association and the Association of Gaming Equipment Manufacturers, among others, called for amendments to the Digital Market Clarity Act. Their proposal seeks to explicitly prohibit prediction markets associated with sports betting and casino-style wagering.
The letter emphasized that operators of prediction markets are sidestepping state and tribal gambling regulations by promoting sports-event contracts as federally regulated financial products. “By marketing nationwide sports betting through so-called 'sports event contracts' and presenting it as a federally regulated financial product, these platforms have evaded state and tribal laws, diminished consumer protections, and undermined a system founded on local governance—one that creates jobs, generates tax income, and supports community initiatives,” the letter stated.
Additionally, the letter expressed concerns regarding the marketing of sports-event contracts as investment opportunities, which could expose younger individuals to gambling risks without adequate responsible gambling measures in place.
The groups also questioned the Commodity Futures Trading Commission's (CFTC) role in overseeing these products, arguing that the agency was not designed to regulate gambling activities and lacks the necessary expertise and infrastructure for effective oversight.
This appeal occurs while federal regulators are still assessing the legal implications of sports-event contracts, which have become a contentious issue between the gambling industry and prediction market operators. The CFTC has proposed regulations that would generally allow sports-related prediction markets but would impose restrictions on contracts deemed susceptible to manipulation or contrary to public interest.
The ongoing debate highlights a broader conflict regarding whether prediction market contracts should be classified as financial instruments under federal regulation or as forms of sports wagering governed by state and tribal gaming laws.