The American Gaming Association (AGA) and the Indian Gaming Association (IGA) are working together to challenge the fast growth of prediction markets that offer sports-related contracts. In a joint letter to Congress on 12 January, they said these products act like sports betting but operate outside existing US gaming laws.

The groups warned that prediction markets threaten state authority, tribal rights, consumer protection, and the safety of regulated financial markets. They said that while these platforms claim to be financial tools, they actually work like gambling, which is already tightly controlled at state and tribal levels.

Concerns over expansion and regulation

Prediction market platforms started offering simple sports contracts last year but have grown quickly. The AGA and IGA said they now include complex bets like sportsbook parlays and even unusual markets, such as college athlete transfers.

The groups said this growth is due to a lack of review by the Commodity Futures Trading Commission, allowing the products to spread without oversight. They reminded lawmakers that existing rules already prohibit certain contracts.

“The CFTC’s own regulations – adopted pursuant to the Commodity Exchange Act (CEA) – prohibit event contracts regarding terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law.” “And while the gaming industry has focused our efforts on stopping unregulated sports wagering, we have seen a troubling proliferation of other concerning betting categories that seek to capitalise on tragedy, invite manipulation, and undermine public trust.”

Regulated gaming versus prediction markets

The AGA and IGA also pointed out the benefits of regulated gaming in the US. They said legal gaming supports millions of jobs, produces significant economic output, and generates tens of billions in tax revenue each year. Regulated operators must follow strict rules like age checks, licensing, anti-money laundering measures, and responsible gaming programs.

In contrast, prediction markets let anyone 18 and older participate nationwide, bypassing state and tribal oversight. The groups said this violates the Commodity Exchange Act, the Indian Gaming Regulatory Act, and the federal Wire Act. They also noted that many state attorneys general have already said these contracts break local laws.

Pressure builds on the CFTC

On the same day, US Senator Catherine Cortez Masto and 11 other senators wrote to CFTC Chair Michael Selig. They asked how the agency will handle fraud, manipulation, and insider trading on prediction markets. They pointed to a market linked to Nicolás Maduro, where trading spiked before his capture, and warned these platforms don’t share information with regulators.

During his confirmation, Selig said the CFTC would wait for court decisions on sports contracts but would follow any clear instructions from Congress. He also acknowledged the need to address risks around insider trading and protect the integrity of the markets.