Gaming Industry Lobbies Senate to Exclude Sports Betting From Crypto Legislation

Key Takeaways

• Major US gaming organizations are lobbying lawmakers to prohibit sports and casino prediction markets within the Clarity Act framework
• Industry groups contend that prediction platforms circumvent state gaming regulations by rebranding wagers as financial instruments
• The Clarity Act has cleared the Senate Banking Committee and awaits a complete Senate floor vote
• State authorities have launched enforcement proceedings against major platforms Kalshi and Polymarket over alleged gambling law violations
• The CFTC has initiated legal action against multiple states to preserve its regulatory authority over sports prediction platforms

Three prominent gaming industry organizations—the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers—have submitted a formal request to Senate members urging the exclusion of sports and casino-related prediction markets from forthcoming cryptocurrency legislation.

According to their correspondence, prediction market operators have facilitated the largest expansion of gambling activity in American history—accomplished without voter consent or legitimate legislative backing.

These organizations contend that such platforms provide coast-to-coast sports wagering capabilities through “sports event contracts” while marketing them as federally supervised financial instruments. This strategic positioning, they maintain, enables operators to circumvent established state and tribal gaming frameworks.

“By offering nationwide sports betting through so-called ‘sports event contracts’ and branding it as a federally regulated financial product, these platforms have bypassed state and tribal law, weakened consumer protections, and undercut a system built on local control,” the letter stated.

The coalition additionally expressed apprehension regarding youth engagement. They maintain that platforms provide insufficient responsible gaming safeguards while promoting gambling offerings as investment opportunities.

Legislative Path Forward for the Clarity Act

The central legislative instrument under discussion is the Clarity Act. The Senate Banking Committee approved its iteration of the legislation last month. A comprehensive Senate floor vote represents the subsequent milestone.

The gaming coalition is requesting that Congress leverage this bill to establish definitively that sports wagering exists beyond the CFTC’s regulatory purview and cannot be facilitated through prediction market operators.

Their correspondence further contended that the CFTC lacks the organizational structure to oversee gambling or sports wagering activities, and is deficient in both the specialized knowledge and operational framework necessary to monitor nationwide sports betting operations.

The CFTC has mounted a vigorous defense. The regulatory body has filed lawsuits against numerous states—including Wisconsin, Illinois, Arizona, Connecticut, New York, and New Mexico—to maintain its jurisdictional control over sports prediction platforms.

Recently, the CFTC unveiled proposed regulatory guidelines that would accommodate sports-focused prediction markets while imposing restrictions on contracts involving terrorism, political assassinations, and military conflicts.

Regulatory Challenges Face Kalshi and Polymarket

Kalshi and Polymarket represent the dominant operators within the prediction market sector. Numerous state authorities have already initiated enforcement measures against both entities, alleging violations of state gaming statutes.

This past March, US senators Adam Schiff and John Curtis put forward the Prediction Markets Are Gambling Act, legislation designed to prohibit prediction contracts connected to sporting events or casino-type games from appearing on registered trading platforms.

Kalshi documented $16.81 billion in monthly trading volume during May, representing an increase from April’s $14.81 billion. Polymarket registered $7.08 billion in May, reflecting a decline from April’s $9.01 billion figure.

The ongoing dispute concerning regulatory authority over prediction markets—whether it belongs to the CFTC or state gambling regulators—has become inextricably linked to the legislative trajectory of the Clarity Act.