Gaming Industry, Tribes and Unions Press Senate to Ban Sports Prediction Markets in Crypto Bill

§ 01 Executive Snapshot

• What: A coalition led by the American Gaming Association is urging the Senate to ban sports prediction markets in a pending crypto market-structure bill.
• Who: Key players include the American Gaming Association, tribal groups, hospitality unions, and prediction market operators like Kalshi and Polymarket.
• Why it matters: The outcome could significantly impact the regulatory landscape for prediction markets and sports betting, potentially affecting state revenues and tribal gaming operations.

§ 02 Key Developments

• The coalition argues that prediction markets have contributed to a $1 billion loss in tax revenue for states since the start of 2025.
• The CLARITY Act is the primary federal legislation that could potentially include a ban on sports prediction markets.
• Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act in March, which would prohibit sports and casino-style event contracts on federally registered platforms.

§ 03 Strategic Context

• The push against prediction markets aligns with broader regulatory efforts to clarify the jurisdiction of the CFTC over event contracts, particularly in the context of sports betting.
• This legislative effort occurs amidst ongoing litigation between state regulators and the CFTC regarding control over prediction markets, highlighting a significant regulatory battle.

§ 04 Strategic Implications

• If the ban is enacted, it could lead to a substantial decrease in the volume of trades for platforms like Kalshi and Polymarket, which rely heavily on sports contracts.
• Long-term, this could set a precedent for how prediction markets are regulated, potentially impacting their growth and innovation in the gaming space.

§ 05 Risks & Constraints

• There is a risk of significant pushback from prediction market operators who contest the coalition's revenue loss claims and assert their legal standing.
• Ongoing litigation in various states could create a fragmented regulatory environment that complicates compliance for prediction market platforms.

§ 06 Watchlist / Forward Signals

• The Senate has yet to schedule a vote on the CLARITY Act, which will be a key milestone for the coalition's efforts.
• Future developments to watch include the potential outcomes of state-level lawsuits against prediction market platforms and any amendments proposed during the Senate discussions on the CLARITY Act.