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What happened
More than 50 organizations signed a letter to the U.S. Senate. That’s a big coalition — major gaming associations, tribal entities, labor unions, all in the same room, all wanting the same thing. They’re pushing the Senate to add language to the Digital Asset Market Clarity Act that would ban prediction markets from offering sports and casino-style event contracts.
The core of their argument: the Commodity Futures Trading Commission doesn’t have the authority or the infrastructure to regulate gambling. Not now, maybe not ever. And that puts platforms like Polymarket and Kalshi squarely in the crosshairs. Both have built their businesses under CFTC oversight, and both would take a direct hit if the coalition gets what it wants.
The CFTC, for its part, has been trying to expand its regulatory footprint. In early June it moved to formalize certain sports event contracts on prediction markets through a rulemaking process. The coalition’s letter lands right in the middle of that effort — and it’s not subtle about it.
The historical context
It’s not the first time legacy operators have done this. Not even close.
In the late 2000s, established casinos hammered digital poker platforms hard. PokerStars and its competitors faced coordinated lobbying campaigns from brick-and-mortar interests who framed their opposition around consumer protection. The real concern, probably, was market share. Then came FanDuel and DraftKings in the mid-2010s — daily fantasy sports giants that ran headfirst into opposition from traditional sports betting operators. Same playbook: regulatory concerns, consumer safety, protect existing frameworks.
Both fights ended messily. Regulations tightened. Some platforms survived. Some didn’t. The current push against prediction markets is pretty much the same story, just with different names on the letterhead.
What’s changed is the scale. Prediction markets are operating at a level that legacy operators can’t ignore. And the Clarity Act gives the coalition a specific legislative vehicle to fight through — which is why they moved fast.
Why it matters
Money. Billions of it.
The American Gaming Association says states have already lost roughly $1 billion in tax revenue to prediction markets since 2025. Prediction market operators dispute that figure. The gap between those two positions is wide, and neither side has budged.
But the financial argument is only part of it. The coalition is also framing prediction markets as a threat to tribal sovereignty. Tribal-state gaming compacts have been built over decades — carefully negotiated agreements that determine who can offer what, and where. If prediction markets can sidestep those compacts by operating under federal CFTC jurisdiction, the whole structure starts to crack. For tribal governments that depend heavily on gaming revenues, that’s not an abstract concern. It’s an existential one.
Labor unions joining the coalition adds a different dimension. It broadens the political appeal, ties the issue to jobs and economic stability, and makes it harder for senators to dismiss the letter as pure industry self-interest.
Senator John Hickenlooper has already amplified the jurisdictional concerns publicly, flagging what he sees as a real gap between what the CFTC is equipped to handle and what it’s being asked to do. His skepticism matters. Senators who share it could swing the vote on whether the coalition’s language ends up in the Clarity Act.
What to watch
The Senate’s decision on the coalition’s language is the immediate trigger. A key vote is expected within nine working days. That’s a short window.
Watch the CFTC closely, too. Any statement from the agency clarifying — or walking back — its authority over sports betting contracts could shift the legislative math fast. Kalshi and Polymarket’s regulatory status is essentially in limbo until that’s resolved.
State tax revenue figures are worth tracking. The $1 billion claim from the American Gaming Association is disputed, but if reported figures start moving in ways that validate it, that changes the political conversation significantly. Governors and state legislators pay attention to those numbers.
And there’s the Schiff-Curtis bill sitting in the background. It’s a separate piece of legislation that specifically targets sports betting on CFTC-registered platforms — an amendment to the Commodity Exchange Act rather than the Clarity Act. Two legislative tracks running at the same time means the pressure on lawmakers is coming from multiple directions. It’s unclear yet which path gains traction first, or whether both stall.
The coalition’s legal argument is narrower than it might seem. They’re not saying prediction markets are inherently bad. They’re saying the CFTC was never designed to regulate gambling, full stop. That’s a statutory interpretation argument, and it’s one that could hold up in court even if it fails in Congress. Prediction market operators have their own legal teams working that angle in the opposite direction.
If the Clarity Act passes with the coalition’s language intact, Polymarket and Kalshi would face hard choices — restructure, litigate, or exit the sports betting vertical entirely. If it passes without that language, the coalition will almost certainly shift to the courts and to state legislatures, pushing for a patchwork of restrictions that could be harder to navigate than a single federal rule.
Either way, the $1 billion tax revenue dispute isn’t going away. Both sides know it’s the number that moves votes.
