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The American Gaming Association (AGA) has reported that states have collectively lost over $1 billion in tax revenue due to sports prediction markets.
Consisting of casinos, tribal gaming groups, and sports betting operators, the organization is intensifying its campaign to control the expansion of sports prediction markets.
According to the AGA’s dedicated site focusing on sports event contracts, prediction market platforms are facilitating illegal sports betting on a national scale, circumventing state and tribal regulatory frameworks designed to safeguard consumers.
A ticker displayed below showcases the accumulating amount of state gaming tax revenues lost since the inception of prediction markets offering contracts on sports events. This figure surpassed $1 billion recently.
The methodology behind the AGA’s calculation of this figure remains unclear. While states without legalized sports betting permit residents to participate in prediction markets, specific tax rates have not been established.
The primary concern revolves around the continuous availability of prediction markets to U.S. citizens in most states, enabling them to wager on sports, including nearly all esports events.
AGA’s Criticisms of Prediction Markets
The AGA’s platform outlines three major grievances against prediction markets:
- Presenting Sports Wagering as an Investment is Deceptive to Consumers
- Consumers Anticipate Oversight That is Nonexistent
- Prominent Advertising by Prediction Markets Lacks Responsible Gaming Safeguards
The AGA argues that users are misled into believing they are engaging in investments when, in reality, they are participating in sports betting. Furthermore, these platforms lack regulatory oversight, as the Commodity Futures Trading Commission (CFTC) has not imposed stringent regulations on operators, unlike state gambling regulators.
Moreover, these platforms do not adhere to the same responsible gambling standards as traditional betting platforms. Although Kalshi recently joined the National Council on Problem Gambling (NCPG) and encouraged other prediction markets to do the same, criticism has arisen regarding the promotion of irresponsible gambling through their advertisements.
An advertisement of this nature would likely not pass regulatory scrutiny at a licensed sportsbook, as most states mandate operators to display responsible gambling messaging.
Escalating Opposition to Prediction Markets
The AGA and other entities are heightening their efforts against prediction markets. Recently, a group named FairPredicts launched a campaign focusing on the alleged misinformation spread by prediction markets, particularly targeting Kalshi.
In response, Kalshi issued a cease-and-desist letter to the organization, which has not disclosed its funding sources. Kalshi asserts that the group is financially supported by casino-backed interest groups, including members of the AGA.
Kalshi also initiated legal action against Rhode Island, prompting the state to file a countersuit against Kalshi.
This week, the CFTC filed a lawsuit against Rhode Island, contending that the state is overstepping its jurisdiction and that prediction markets fall under the agency’s exclusive purview. Similar actions were taken in Arizona, Connecticut, Illinois, and Minnesota.
“CFTC-registered exchanges are facing a barrage of lawsuits aiming to restrict Americans’ access to event contracts and undermine the CFTC’s sole regulatory authority over prediction markets. This power struggle disregards established laws and precedents,” stated CFTC Chairman Michael Selig in a press release.
Trump Backs CFTC and Prediction Markets
President Donald Trump voiced his strong support for the CFTC and prediction markets this week. Trump Media has collaborated with Crypto.com, and his son, Donald Trump Jr., serves as a strategic advisor to both Kalshi and Polymarket.
“Maintaining the exclusive authority of the CFTC over Prediction Markets and ensuring their prosperity is of utmost importance,” Trump expressed in a post on his social media platform Truth Social.
“Under my guidance, we are establishing the ‘gold standard’ for state regulations. We cannot allow individuals like Chris Christie, Letitia James, Tim Walz, and JB Pritzker to dictate the rules!”
Chris Christie, an advisor to the AGA, played a pivotal role in legalizing sports betting in the U.S., securing a significant Supreme Court ruling during his tenure as Governor of New Jersey.
The AGA seems poised to continue its stance against prediction markets. Companies like DraftKings and FanDuel have already distanced themselves from the organization due to their involvement in this contentious industry.