Gaming Associations Call for Senate Action to Restrict Prediction Markets Under CLARITY Act

Major US gaming industry associations have urged the Senate to add specific provisions to the CLARITY Act, a bill focused on cryptocurrency regulation, that would prohibit sports and casino-style prediction markets offered by platforms including Polymarket and Kalshi. The American Gaming Association, Indian Gaming Association, and Association of Gaming Equipment Manufacturers sent a joint letter outlining their position that these platforms operate as unregulated gambling activities outside established state frameworks. The associations argue that such markets bypass state gambling laws, tribal gaming compacts, consumer protection measures, and tax obligations, which they describe as an expansion of gambling without direct legislative approval. Their letter emphasizes that these prediction market offerings function similarly to sports betting and casino games yet fall under the oversight of the Commodity Futures Trading Commission rather than traditional gaming regulators.

Key Arguments Presented in the Joint Letter

The groups highlight several areas of concern in their submission to Senate and House leaders. They note that platforms like Polymarket and Kalshi allow betting on sports events and other outcomes that mirror traditional gambling products, while avoiding the licensing, taxation, and responsible gaming requirements that apply to state-regulated operators. According to the letter, this structure creates an uneven competitive environment and leaves gaps in protections for participants.

Youth access represents another point raised by the associations, which point out that prediction market platforms currently lack the age verification standards and parental controls common in licensed gaming jurisdictions. The organizations also question the CFTC's experience in managing sports betting markets, suggesting that the agency's regulatory focus on commodities leaves it less equipped for issues such as problem gambling intervention and dispute resolution that arise in event-based wagering.

Details on the CLARITY Act Context

The CLARITY Act aims to establish clearer rules for digital asset markets and trading platforms. The gaming associations seek to insert language that would explicitly exclude sports and casino-style contracts from the types of event contracts permitted under CFTC jurisdiction. Their request targets contracts that involve outcomes tied to athletic competitions, elections in certain cases, or entertainment events that resemble wagers rather than financial derivatives.

Observers note that this approach would shift oversight responsibilities back toward state and tribal authorities already handling gaming regulation. The associations reference existing tribal compacts and state licensing systems as the appropriate mechanisms for managing these activities, arguing that federal legislation should not preempt those structures without explicit congressional direction.

Regulatory and Consumer Protection Concerns

The letter addresses gaps in responsible gambling tools on prediction market platforms, including self-exclusion programs, deposit limits, and access to problem gambling resources that state-regulated operators must provide. Associations point out that these features remain inconsistent or absent across platforms operating under current CFTC guidelines for event contracts.

Tax collection forms another area of focus. The groups indicate that prediction market activity generates revenue outside the tax frameworks applied to licensed casinos and sportsbooks, reducing contributions to state budgets that fund education, public safety, and problem gambling treatment programs. Data referenced in the letter connects these revenue flows to broader questions about market expansion without corresponding legislative oversight.

Position on Existing State and Tribal Authority

The associations emphasize that states and tribes have developed comprehensive systems for licensing, monitoring, and taxing gaming activities over many years. They argue that allowing prediction markets to operate without these requirements undermines the balance achieved through negotiation of tribal compacts and state ballot measures. The letter calls for provisions that would preserve this existing authority rather than create new federal pathways for similar products.

Industry representatives have referenced the joint letter as a formal request for legislative clarity during ongoing debates over the CLARITY Act's final language. The document, available through public records, outlines specific amendments proposed to address the scope of permissible event contracts.

Conclusion

The gaming associations' request targets the intersection of cryptocurrency regulation and event contract oversight by seeking explicit exclusions in the CLARITY Act. Their submission details concerns about regulatory bypass, consumer protections, youth access, and institutional expertise while advocating for continued reliance on state and tribal gaming frameworks. The outcome of these recommendations will depend on Senate deliberations regarding the bill's provisions in the coming months.