US: Gaming groups urge Congress to rein in prediction markets
A powerful alliance of US gaming interests has called on Congress to intervene in the fast-growing market for sports prediction contracts, warning that platforms operating under federal commodities law are offering what amounts to unregulated sports betting.
In a joint letter sent to lawmakers on 12 January, the American Gaming Association (AGA) and the Indian Gaming Association (IGA) urged legislators to use forthcoming cryptocurrency market structure legislation to shut down sports-related “event contracts” traded on prediction markets. The groups argue that these products bypass state gambling laws, undermine tribal sovereignty and expose consumers to risks that regulated sports betting was designed to prevent.
‘Indistinguishable from legal sports betting’
The AGA and IGA say that prediction market platforms have expanded far beyond their original remit, moving aggressively into sports and other sensitive areas. In their letter to members of the Senate and House of Representatives, the organisations warn that “unregulated sports event contracts” are now being offered at scale, often to users as young as 18 and across all 50 states.
“These contracts, that are indistinguishable from legal sports betting, were launched last January,” the letter says, adding that they have “grown exponentially in trading volume and have expanded beyond the outcome of single games to include complex parlays and even potential wagers on the collegiate transfer portal.”
The groups accuse platforms of exploiting regulatory gaps at the federal level, arguing that the CFTC has allowed contracts to be self-certified without meaningful review. According to the letter, this “undermines state law and tribal sovereignty and flies in the face of existing federal laws and regulation intended to protect consumers and the integrity of our nation’s financial markets”.
At the centre of the complaint is the distinction between gambling, which is regulated primarily by states and tribes, and derivatives trading, which falls under federal oversight. Prediction market operators have argued that their products are financial contracts, not bets. The AGA and IGA reject that framing, insisting that Congress must act to prevent “sports betting and casino gambling under the guise of ‘event contracts’”.
States, tribes and a federal fault line
Since the US Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, states have taken the lead on sports betting regulation. Today, 39 states and the District of Columbia allow some form of legal sports wagering, often in partnership with tribal authorities. The gaming groups say that this system reflects a deliberate choice by voters and lawmakers to impose strict safeguards.
The letter lists measures such as “minimum betting ages (21+ in most jurisdictions)”, “anti-money laundering (AML) and Know Your Customer (KYC) protocols” and “mandatory responsible gaming resources, including self-exclusion programs”.
By contrast, the AGA and IGA argue that CFTC-registered prediction platforms allow nationwide access to sports contracts with far fewer restrictions. “Several CFTC registered prediction market platforms have made self-certified event contracts available to anyone 18 and over, in all 50 states,” the letter says, claiming this denies states and tribes “hundreds of millions of dollars of critically needed revenue for schools, roads and first responders”.
The groups also point to legal conflicts. They note that the Commodity Exchange Act bars contracts related to gaming or activities that are unlawful under state or federal law, and say that 39 state attorneys general have concluded these sports contracts violate their statutes. The letter further argues that the products breach the Indian Gaming Regulatory Act and the federal Wire Act, which restricts interstate sports wagering.
Beyond sports, the associations express alarm at markets tied to violence and geopolitics. They cite contracts linked to armed conflicts and even the capture of Venezuela’s president, saying such offerings “seek to capitalize on tragedy, invite manipulation, and undermine public trust”.
DraftKings and the industry split
The warning from the AGA and IGA comes at a moment of open division within the US betting industry. In November 2025, DraftKings and FanDuel ended their membership of the AGA after launching their own prediction market platforms.
DraftKings formally entered the space in December with the launch of DraftKings Predictions, a standalone app offering event contracts under CFTC oversight.
“This is a significant milestone and reflects our ongoing commitment to delivering products that tap into the passion of our customers,” Corey Gottlieb, DraftKings’ chief product officer, said at the time in the company’s press release. “We will create an unparalleled customer experience, leveraging key strategic relationships like ESPN and NBCUniversal to provide an authentic, real-time product that moves at the speed of sports.”
The AGA letter reflects growing frustration among established gaming interests. The associations say that prediction markets “mislead consumers into believing that a sports bet is an investment” and “open the door to money laundering, match fixing and insider trading”.
Congress as the deciding factor
While state regulators and courts have been drawn into disputes over prediction markets, the AGA and IGA argue that only Congress can resolve the issue decisively. They point to comments made by the current CFTC chair during his confirmation hearing.
“Chairman Selig made it clear that the CFTC would not rein in sports betting contracts under his leadership, instead deferring to the outcome of litigation that could take years to be fully resolved,” the letter says. However, it adds that he also indicated the agency would follow clear direction from lawmakers.
For supporters of prediction markets, 2025 marked a turning point, with platforms gaining cultural visibility, media partnerships and investor backing. Critics now fear that momentum has outpaced regulation.
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