Prediction Markets Are the House's New Enemy — and Congress Just Got the Memo 🃏

A coalition of national gaming, tribal and labor organizations is pressing the US Senate to insert language into the Digital Asset Market Clarity (CLARITY) Act that "explicitly prohibits event contracts tied to sports and casino-style gaming," according to a Wednesday Semafor report. Signers include the Indian Gaming Association and the American Gaming Association, groups that historically disagree on gambling policy but have aligned against prediction-market wagering.

In a letter to lawmakers, the coalition argued that "sports betting falls outside the [Commodity Futures Trading Commission's] remit and cannot be offered through prediction market platforms." The groups added, "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 US history over the past 18 months — without voter approval or legislative authorization."

The pushback comes as CFTC Chair Michael Selig has asserted "exclusive jurisdiction" over prediction markets and backed platforms including Kalshi and Polymarket against state-level gaming lawsuits. "The CFTC was created to oversee commodities and derivatives markets, not gambling and not sports wagering," the letter stated. "It lacks both the expertise and the infrastructure to police nationwide sports betting, particularly when robust state and tribal regulatory systems already exist."

The American Gaming Association reported that as of Wednesday, state gaming authorities had lost about $1.08 billion in tax dollars "since prediction markets began offering sports event contracts." Some lawmakers expect the CLARITY Act, which would shift portions of digital-asset oversight from the Securities and Exchange Commission to the CFTC, to clear Congress by August; the bill passed the House in July 2025 and has faced delays over stablecoin yield, ethics and tokenized equities.

Some legal observers and industry advocates anticipate that the CFTC's threat to challenge state crackdowns in court could elevate the federal-state dispute to the US Supreme Court. The high court affirmed state authority over sports gambling in its 2018 ruling in Murphy v. National Collegiate Athletic Association, while Kalshi, Polymarket and the CFTC have maintained that event contracts qualify as "swaps" under federal jurisdiction.