NCLGS backs US state authority over prediction market regulation
The National Council of Legislators from Gaming States (NCLGS) has unanimously approved a resolution calling for states and tribal governments to retain primary authority over gambling and sports wagering regulation. The resolution was adopted during the organisation’s July meeting in San Diego amid growing debate over regulating prediction markets.
NCLGS stated that the rapid growth of prediction market platforms outside traditional sportsbook licensing systems raises issues about consumer protection, taxation, and regulatory control.
The organisation urged Congress to ensure that any federal action respects state and tribal sovereignty over gaming regulation, as lawmakers debate whether sports event contracts should be regulated as financial products or gambling activities.
NCLGS resolution on prediction markets
The resolution adopted by the NCLGS highlights the role of states in regulating gambling. For decades, states have decided whether to allow sports betting, casinos, lotteries, or poker. Since the Professional and Amateur Sports Protection Act (PASPA) was repealed in 2018, states have gained even greater authority to shape their own sports betting systems.
Another issue complicates matters: prediction market operators are known to use federal commodities legislation to cover event contracts rather than state gaming legislation.
The recommendation emphasises the importance of maintaining state-level gaming regulation, especially if such products are similar to sports betting. Politicians are concerned that prediction market operators will attempt to circumvent the licensing requirements that sportsbooks and casinos must follow.
Juliann Barreto, Chief Operating Officer of Spectrum Gaming Group, which acts as the Executive Director of NCLGS, said the organisation is committed to providing lawmakers with non-partisan and in-depth education on key gaming policy issues.
Barreto stated, “Prediction markets represent one of the most significant emerging issues confronting state policymakers, and we have ensured that our members hear directly from experts on all sides of the debate.”
Key objectives of resolution
The purpose is to eliminate any form of regulatory arbitrage in which companies choose the least restrictive level of oversight. If prediction markets treat contracts as commodities, they would unfairly compete with sportsbooks.
It also requests greater legal clarity from Congress and federal agencies. Clear definitions help regulators, companies, and consumers alike. The NCLGS has encouraged the Commodity Futures Trading Commission (CFTC) to investigate whether political and sports-related prediction markets could be classified as financial products free from gaming regulation.
Regulatory concerns over prediction markets
Furthermore, the NCLGS’s resolution addresses more than just the rivalry between sportsbooks and prediction market platforms. Politicians argue that the rapid growth of the event contract market raises concerns about regulatory consistency, consumer protection, and public trust. They support innovation, but they believe it should take place within the framework of the law.
Because of digitalisation, prediction markets are now accessible to everyone, allowing anyone to bet on any sporting event, election, or economic scenario in any state. Customers have no guarantees regarding licensing, dispute resolution, or protection because these products are governed by separate authorities. Therefore, it is critical for the NCLGS to address all of these challenges immediately.
Recently, the North American Association of State and Provincial Lotteries (NASPL) and the World Lottery Association (WLA) have called on governments to regulate prediction markets under gambling laws rather than financial regulations. The NASPL claims that these platforms operate like gambling without complying with the same laws as regulated operators.
The notice issued by NASPL raises the issue of regulatory inconsistency. NASPL does not oppose innovation; rather, it emphasises that it must take place within a legal framework that protects consumers while also promoting competition. The organisation argued that this undermines decades of gambling legislation aimed at reducing problem gambling, fraud, and ensuring sports integrity.
Tribal gaming leaders’ testimony
Tribal administrations have expressed serious concerns about prediction markets. During a House Agriculture Committee hearing on sports event prediction markets, Indian Gaming Association Chairman David Z. Bean argued that tribal and state governments should be responsible for gaming laws, not federal financial authorities.
Bean said, “The issue before Congress today is much larger than sports betting. This is about protecting tribal sovereignty, preserving the integrity of the Indian Gaming Regulatory Act, defending rural economies, and ensuring that consumers, especially young people, are protected through the responsible regulatory systems that Tribes and states have spent decades building.”
Tribal officials emphasised that their gambling operations were developed through negotiations that included a balance between economic growth and regulation. If prediction markets allow traders to trade products comparable to sports bets without following the rules, the tribes believe it will lead to unfair competition and jeopardise the existing regulatory framework.
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