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The American Gaming Association has urged Congress to prevent prediction market platforms from offering nationwide sports betting through contracts regulated by the Commodity Futures Trading Commission.
Testifying before a Senate Agriculture subcommittee, AGA Senior Vice President of Government Relations Christopher Cylke said platforms including Kalshi and Polymarket are using federal event-contract rules to operate outside state and tribal gambling systems.
“Sports betting on prediction markets makes a mockery of congressional intent,” Cylke said. “Congress did not want sports betting to be conducted on derivatives markets. These products are sports betting, plain and simple.”
Prediction markets classify their sports products as financial contracts. Users, however, stake money on game outcomes, player performances, scores, and other sporting events in exchange for a payout. The AGA argued that the activity is functionally identical to sports wagering.
Kalshi recorded $23.7 billion in trading volume last year and $111 billion during the first six months of this year, according to the testimony. More than 80% of that activity involved sports, including an estimated $2.5 billion in World Cup volume during the past month.
The platforms remain available in jurisdictions that have rejected sports betting or imposed restrictions on how it may be offered. The AGA said this undermines state laws, tribal gaming compacts, licensing requirements, and tax systems established following the 2018 repeal of the federal sports betting ban.
States and tribes have lost more than $1.2 billion in gaming tax revenue since prediction markets began offering sports contracts, the association estimated.
The AGA also raised concerns about age limits and consumer safeguards. Prediction markets may accept users aged 18, while most regulated sportsbooks require customers to be at least 21. Kalshi has disclosed that about 4% of its volume comes from users under 21.
Prediction market operators accounted for 45% of digital sports betting advertisements seen by consumers during the first five and a half months of this year, without being subject to state responsible gaming advertising requirements. The AGA said 78% of sports contract users incorrectly believed state gaming regulators could resolve disputes involving the platforms.
A bipartisan group of 41 state attorneys general has also warned the CFTC that sports prediction markets bypass state consumer protections and tax obligations.
The AGA called on Congress to classify sports event contracts as gambling and prohibit CFTC-registered platforms from listing them through self-certification.
“Acting now will protect your constituents, respect tribal sovereignty, preserve state authority, safeguard sports integrity, and ensure the CFTC can focus on the mission Congress assigned it,” Cylke said.
Access the full testimony here.