Gaming Industry, Unions, and Tribal Groups Push to Block Sports Betting on Prediction Markets via Crypto Bill

The U.S. gaming industry, joined by labor unions and Native American tribal organizations, is urging Congress to include language in an upcoming cryptocurrency bill that would effectively prohibit sports betting on prediction market platforms such as Kalshi. The coalition argues that these platforms have enabled the largest expansion of unregulated gambling in American history without legislative oversight.

Coalition Calls for Clear Jurisdictional Boundaries

The American Gaming Association (AGA), the Indian Gaming Association, and UNITE HERE, a hotel and gaming workers’ union affiliated with the AFL-CIO, have jointly petitioned lawmakers. Their central demand is that the pending crypto bill codify the principle that sports betting falls outside the jurisdiction of the Commodity Futures Trading Commission (CFTC). This would prevent the regulator from allowing prediction markets to offer sports-related contracts, which the coalition views as a circumvention of state and federal gambling laws.

According to a report by Semafor, the groups contend that over the past 18 months, prediction markets have facilitated the largest expansion of gambling in U.S. history — all without the approval of state legislatures or Congress. The coalition argues that this represents a regulatory loophole that must be closed.

Disputed Economic Impact

Last month, the AGA released an estimate claiming that states lost approximately $1 billion in tax revenue during 2025 due to the diversion of sports betting activity from regulated state channels to unregulated prediction markets. However, representatives from the prediction market industry have disputed this figure, arguing that the methodology overestimates the impact and conflates different types of financial and event contracts.

The disagreement underscores a broader conflict over how prediction markets should be classified — as financial derivatives regulated by the CFTC, or as gambling activities subject to state gaming laws. The outcome of this legislative battle could reshape the regulatory landscape for both the crypto and gaming sectors.

Why This Matters to Crypto and Gaming Stakeholders

The crypto bill, which is expected to address stablecoin regulation and market structure, has become an unexpected battleground for the future of sports betting. If the coalition succeeds, it would effectively bar platforms like Kalshi and others from offering contracts on the outcomes of sporting events. This would preserve the existing state-by-state regulatory framework for sports gambling, which currently generates significant tax revenue for states that have legalized it.

For the prediction market industry, the provision would represent a major setback, limiting their product offerings and potentially driving users to offshore or unregulated alternatives. The debate also raises broader questions about the role of the CFTC in overseeing event-based contracts and whether Congress intended for the agency to regulate what amounts to sports wagering.

Conclusion

The push to include a sports betting ban in the crypto bill highlights the growing tension between established gaming interests and the emerging prediction market sector. As Congress considers the legislation, lawmakers must weigh the arguments of the gaming industry, tribal groups, and unions against the innovation and consumer choice claims of prediction market platforms. The decision will have lasting implications for how sports betting is regulated in the United States.

FAQs

Q1: What is the main goal of the gaming industry coalition regarding the crypto bill?
The coalition wants Congress to include a provision in the crypto bill that explicitly prohibits sports betting on prediction market platforms, clarifying that such activity falls under state gambling laws, not CFTC jurisdiction.

Q2: Why are prediction markets considered a threat by the gaming industry?
The gaming industry argues that prediction markets have expanded sports betting without state or federal approval, diverting revenue away from regulated state gambling systems and costing states billions in lost tax revenue.

Q3: How might this affect the cryptocurrency bill’s passage?
The sports betting provision could become a contentious issue, potentially slowing the bill’s progress or leading to its removal if lawmakers cannot reach consensus. It also introduces a new regulatory debate into legislation primarily focused on digital assets.