Federal oversight of prediction market “event contracts” tied to sporting events and potentially even slot machine spins would usurp long-established state and tribal authority over regulated wagering and put public trust at risk, three major gaming organizations argue.
The American Gaming Association, Indian Gaming Association, and Association of Gaming Equipment Manufacturers detailed their concerns in separate July 27 filings with the Commodities Futures Trading Commission. The Commission maintains that it is responsible for regulating all event contracts and is proposing updates to its rules for prediction markets, which it said had a trading volume of more than $25 billion in 2025.
The proposal drew 1,444 responses before the comment period ended this week.
The submission from IGA Chairman David Z. Bean called the plan “an insult to the principles of tribal sovereignty” and “a poorly disguised attempt to appease major prediction market platforms.” It said sports contracts offered by prediction markets would tear down the legal framework established by the Indian Gaming Regulatory Act and damage the safe and effective gaming practices that have bolstered tribal economies for almost 40 years.
AGEM President and CEO Daron Dorsey said the proposed changes would bypass state, tribal, and federal regulatory processes that have governed the gaming industry for decades and “establish an unprecedented new scheme managed by a single federal agency that lacks the expertise, staffing, and statutory mandate to regulate gaming.”
AGA President and CEO William C. Miller Jr. said the Commission is a financial-markets regulator, not a national gaming commission. “It lacks both the expertise and resources to replace the more than 8,400 state and tribal regulators who oversee legal gaming today. The Commission should withdraw the proposed revisions … and put an end to the unlawful nationwide expansion of sports wagering through prediction markets.”
In addition, a response signed by the attorneys general of 44 states said the proposed rule “takes a sledgehammer to the states’ historic power” and gives the Commission the sole power to decide “what gambling will be permitted, where it will take place, and how it will operate.”
The commission says its proposal is a necessary update of how it oversees event contract derivatives, adding that many Americans view them as both a financial asset class and a source of reliable information. In a June op-ed column for the Washington Reporter, Commission Chairman Michael S. Selig said the proposed changes bring “clarity, predictability, and transparency” as prediction markets continue to develop. Without the updates, he wrote, offshore operators will continue to offer event contracts “contrary to the public interest” and outside the Commission’s regulatory reach.
Dorsey noted that the proposed rule would allow all contracts — even those involving terrorism, assassination, and war — to be listed for trading, unless the Commission orders their removal within 10 days. With such a brief window for review, he wrote, prediction market operators could offer contracts on the outcome of online poker or online slot machines as long as the Commission doesn’t intervene, he wrote.
“The proposed rule would open the floodgates to nationwide online casino gaming,” Dorsey said. A provision that would favor contracts that are “significantly affected by the participants’ skill” would enable unscrupulous actors to offer so-called “skill games” that mimic slot machines, he added.
Bean said regulated sports betting has generated billions of dollars in taxes and other government revenue since the 2018 court ruling paving the way for all states to offer it. “At the same time,” he continued, “the great majority of federally recognized tribal governments and at least 20 states prohibit online sports betting, because of the risks associated with underage and problem gambling.” He said the Commission’s proposal would expose consumers to gambling without the protections required under typical gaming laws and would be open to those under 21.
The comments from the 44 attorneys general echoed that concern. “The proposed rule fails to consider many of the negative consequences or harms associated with gambling, including gambling addiction, teenage gambling, and ensuring confidence in gambling businesses,” they said. “The (Commission) utterly ignores them.”
While the AGA doesn’t oppose prediction markets themselves, Miller said, “We oppose federally regulated platforms offering nationwide sports betting under the guise of ‘event contracts.’ The proposed rule concedes that sports event contracts involve gaming, yet creates a permissive framework designed to allow them.”
The dispute over prediction markets is playing out in court as well. This week, a federal judge paused enforcement of a new Minnesota law barring prediction markets. The ruling in favor of the Commission and prediction market operators Kalshi and Polymarket said some contracts could be considered financial instruments under the Commission’s exclusive jurisdiction. On Wednesday, a U.S. District Court judge denied the Commission’s request for an injunction to prevent the state of Wisconsin from using its gambling laws to prevent prediction markets operating there. The Commission has sued multiple states and has been sued by several others.
