Prominent organizations within the U.S. gambling sector are urging Congress to implement a ban on prediction market platforms that offer contracts related to sports events, arguing these offerings constitute unregulated sports betting and pose a potential threat to the integrity of the regulated gaming landscape in the nation.

In a letter directed to the Senate, representatives from the American Gaming Association, the Indian Gaming Association, the Association of Gaming Equipment Manufacturers, along with other industry stakeholders, have expressed their desire for lawmakers to revise the Digital Market Clarity Act. They propose the explicit prohibition of prediction markets associated with sports betting and casino-style gambling.

The organizations contend that prediction market operators are evading state and tribal gambling regulations by presenting sports event contracts as federally overseen financial instruments.

“These platforms are effectively providing national access to sports betting via ‘sports event contracts’, falsely portraying them as federally regulated financial products. By doing so, they have circumvented state and tribal regulations, diminished consumer protection measures, and undermined a system grounded in local governance that creates jobs, generates tax revenue, and supports community initiatives,” the letter stated.

The correspondence also highlighted worries that sports event contracts are being marketed as investment opportunities, which could expose younger users to gambling risks and fail to implement adequate responsible gambling measures.

The industry representatives additionally criticized the role of the Commodity Futures Trading Commission (CFTC) in governing these products, maintaining that the regulatory body was not designed to oversee gambling operations and lacks the necessary expertise and framework to regulate them sufficiently.

This appeal arrives as federal agencies continue to scrutinize the legal classification of sports event contracts, which have become a focal point of contention between traditional gambling entities and prediction market platforms.

The CFTC has suggested guideline modifications that would generally permit sports-related prediction markets, while placing restrictions on contracts deemed susceptible to manipulation or contrary to public welfare.

The ongoing debate illustrates wider disagreements over whether prediction market contracts should be categorized as financial instruments regulated at the federal level or as various forms of sports betting governed by state and tribal gaming laws.