AGA urges Congress to restrain sports event prediction markets
The American Gaming Association (AGA) urged Congress on Tuesday to tighten oversight of sports event prediction markets, warning that platforms like Kalshi and Polymarket are operating under the guise of “backdoor sportsbooks” without the consumer protections or tax obligations required of licenced operators.
Christopher Cylke, Senior Vice President of Government Relations at the AGA, testified before the Senate Committee on Agriculture, Nutrition, and Forestry during a hearing on Examining Customer Protections and Market Integrity in Sports Event Prediction Markets. He argued that prediction markets are exploiting Commodity Futures Trading Commission (CFTC) registration to sidestep state and tribal gambling laws.
“Sports betting on prediction markets makes a mockery of congressional intent,” Cylke said. “Congress did not want sports betting to be conducted on derivatives markets. These products are sports betting, plain and simple.”
Legal grey zone
Today’s prediction markets capture a complex regulatory space. At the federal level, they fall under the CFTC as “event contracts.” But a growing number of states have classified them as gambling, resulting in ongoing jurisdictional disputes. Recently, court rulings have sided with federal preemption. This has strengthened CFTC’s authority, but state regulators continue to challenge that position.
AGA’s concerns
For Cylke, there are several concerns that need immediate attention, beginning with consumer protection gaps. He revealed that prediction markets lack age verification, geolocation, and responsible gaming protections. Users as young as 18 still have access to these platforms. Meanwhile, most legal sportsbooks limit access to those 21 and older.
He also highlighted how states and tribes have lost more than $1.2 billion in gaming tax revenue since prediction markets began offering sports contracts. Cylke also shed light on sports integrity risks. Without licenced operators monitoring suspicious activity, he warned that betting patterns could go undetected, undermining confidence in sporting events.
Finally, he pointed out jurisdictional conflict. Cylke stressed that gambling policy belongs to states and tribes, not the CFTC, which was never designed to regulate sports betting.
Pushback from industry
Yet objections to AGA’s position have increased with industry associations, major operators like DraftKings and FanDuel, and advocacy groups pointing out that prediction markets symbolise financial innovation instead of “backdoor sportsbooks.” Critics also blame the AGA for protecting casino interests at the expense of consumer choice and market effectiveness.
Economic impact
At the moment, the legal gaming industry supports 1.8 million jobs and contributes $329 billion to the U.S. economy. It also generates $53 billion in annual tax revenue. But Cylke argued that prediction markets weaken this framework when licencing fees, taxes, and accountability measures are evaded.
Call for congressional action
Cylke urged lawmakers to clarify three points. The first point is that sports wagering is gambling, regardless of how platforms label it. Next is that gambling policy belongs to states and tribes, consistent with federal law. Finally, CFTC-registered entities should not be permitted to offer nationwide sports betting through self-certified contracts.
“Acting now will protect your constituents, respect tribal sovereignty, preserve state authority, safeguard sports integrity, and ensure the CFTC can focus on the mission Congress assigned it,” Cylke said.
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