Several national gaming and tribal organizations and labor groups have reportedly urged the U.S. Senate to add language to the Digital Asset Market Clarity (CLARITY) Act that “explicitly prohibits contracts related to sports and casino gaming events.”
According to Semafor’s Wednesday report, sports betting-related groups including the Indian Gaming Association and the American Gaming Association united against what they called gambling in prediction markets. They asked the US Congress to exploit the CLARITY Act currently pending in the Senate to confirm that “sports betting is outside the scope of [Commodity Futures Trading Commission’s] and cannot be offered through prediction market platforms.”
“While our organizations may differ on other issues, including gambling policy, we are united in our concern that prediction markets have fueled the largest expansion of gambling in U.S. history over the past 18 months — without voter approval or legislative authority,” the letter reads.
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The groups’ pushback came after the Commodity Futures Trading Commission (CFTC), chaired by Michael Selig, declared “exclusive jurisdiction” over forecast markets. Selig led the financial regulator in supporting platforms like Kalshi and Polymarket against lawsuits brought by state-level gaming authorities.
“The CFTC was established to oversee commodity and derivatives markets, not gambling or sports betting,” the letter says. “There is a lack of both the expertise and infrastructure to police nationwide sports betting, especially when robust state and tribal regulatory systems already exist.”
American Gaming Association reported that as of Wednesday, state gambling authorities had lost about $1.08 billion in taxes “since prediction markets began offering contracts for sporting events.”
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Some lawmakers expect the CLARITY Act, which aims to transfer some authority to regulate and enforce digital assets from the Securities and Exchange Commission (SEC) to the CFTC, to be passed by Congress by August. The bill passed the House of Representatives in July 2025 but has faced delays due to concerns about the viability of stablecoins, ethics and tokenized stocks.
The legal battle could end up in the U.S. Supreme Court
Some experts and industry advocates predict that with Selig and the CFTC threatening to sue all state-level authorities over attacks on prediction markets, the dispute between federal and state regulators could ultimately be heard by the U.S. Supreme Court.
The nation’s highest court, in its 2018 decision, gave individual states the power to regulate sports gambling Murphy v. National Collegiate Athletic Association. However, Kalshi, Polymarket and the CFTC have largely argued that event contracts on prediction market platforms constitute “swaps” subject only to the agency’s jurisdiction.
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