- Major gaming, tribal, and labor groups are urging the US Senate to ban sports-based event contracts in the CLARITY Act.
- The groups argue the CFTC lacks expertise to regulate sports betting, which they frame as gambling, not derivatives.
- State gaming authorities have reportedly lost over $1 billion in tax revenue to prediction market platforms.
- The legal battle over jurisdiction between the CFTC and state regulators may escalate to the US Supreme Court.
A coalition of national gaming, tribal, and labor organizations has called on the US Senate this week to explicitly prohibit sports betting contracts within the proposed Digital Asset Market CLARITY Act. According to a Wednesday report, groups including the Indian Gaming Association and American Gaming Association have united against prediction markets. They contend these platforms have expanded gambling without voter or legislative approval.
The pushback directly challenges Commodity Futures Trading Commission (CFTC) Chair Michael Selig’s claim of “exclusive jurisdiction” over such markets. Consequently, the letter states the CFTC was not created to oversee gambling and lacks the proper infrastructure. It argues robust state and tribal regulatory systems are already in place for this purpose.
Financial impacts are also a central concern for the opposition. The American Gaming Association reported that state authorities have lost an estimated $1.08 billion in tax revenue. This loss is directly attributed to prediction markets offering sports event contracts.
Meanwhile, the broader CLARITY Act, which aims to shift digital asset regulatory authority from the SEC to the CFTC, faces a potential August passage deadline. However, it has been delayed by debates over stablecoin yields and tokenized equities. Some experts now anticipate a major legal clash over jurisdiction.
The conflict stems from the CFTC’s defense of platforms like Kalshi and Polymarket against state lawsuits. These platforms argue their event contracts are “swaps” under federal purview. This federal stance potentially contradicts the US Supreme Court’s 2018 decision in Murphy v. NCAA, which granted states the authority to regulate sports gambling.
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