The U.S. Senate on Tuesday failed to clear a procedural hurdle for the CLARITY Act, a vote tribal-gaming operators and lawmakers believe was a crucial step in their efforts to prohibit prediction market companies from offering sports-event contracts.
Senators voted 49-50 to reject cloture on the motion, a legislative step that limits debate on whether to take up the legislation and requires 60 votes. Even if it did pass the Senate after closure, the bill still had to go back to the House for its consideration.
The bill is likely dead for 2026, with no realistic path to reconciliation until after the midterm elections in November. The CLARITY Act would establish rules for crypto markets and clarify the respective responsibilities of the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission (CFTC).
“The bill would allow prediction markets to continue to perpetuate illegal gaming operations that ignore state and tribal law,” Senator Catherine Cortez Masto, D-Nevada, said in a statement following the vote.
Cortez Masto expressed frustration with her Republican colleagues over negotiating with them on a bill that would establish clear guardrails for the crypto industry. She noted her previous support for the GENIUS Act, but blamed Republicans for shutting down conversations at the last minute, leaving “critical provisions unresolved.”
“This version of the CLARITY Act is a step backwards from the language passed out of the (Senate) Banking, Housing and Urban Affairs Committee and clearly undermines law enforcement’s ability to both investigate crypto crimes and ensure bad actors cannot use crypto for illicit finance,” Cortez Masto said.
Senator Jacky Rosen, D-Nevada, joined Cortez Masto in voting no.
The revision, opposed by tribal and commercial operators and state gaming regulators, specifies the bill’s DeFI provisions apply only to spot and case digital-commodity transactions. According to media reports, the distinction was important to prediction markets, because it reduces the risk that broad DeFi language inadvertently rewrites regulations overseeing event contracts.
Cortez Masto’s concerns over illegal gambling operations by prediction markets comes as Crypto.com and Robinhood have petitioned the U.S. Supreme Court to consider if the Commodity Exchange Act preempts states from regulating sports-event contracts through their own gaming laws.
The filing comes after the U.S. Court of Appeals for the Ninth Circuit’s recent ruling affirmed a Nevada judge’s decision to dissolve an approved Kalshi injunction and allow state gaming regulators to uphold its state gambling laws against sports-event contracts.
The Ninth Circuit’s decision combined both Robinhood and Crypto.com’s sports-event-contract cases into its Kalshi ruling. It’s unknown if the Supreme Court will take up Robinhood or Crypto.com’s writ of certiorari to review the Ninth Circuit’s decision.
Failure a victory for tribal sovereignty
David Bean, chairman of the Indian Gaming Association (IGA), described the Senate’s failure to advance H.R. 3633 a victory for tribal sovereignty, but warned that the fight against illegal prediction markets offering sports-event contracts continues.
For months, the IGA, tribal nations, and partner organizations have lobbied Congress to reject any version of the CLARITY Act that fails to explicitly protect tribal sovereignty, the Indian Gaming Regulatory Act (IGRA), tribal-state compacts, and the authority of tribal and state governments to regulate gaming within their jurisdictions.
“Today, Indian Country’s voice was heard,” Bean said in a statement. “The Senate did the right thing by refusing to advance legislation that could have expanded CFTC commodities authority without providing the clear protections tribal nations have demanded.”
Bean said the IGA opposed the legislation because it failed to clearly prohibit prediction market platforms from offering sports betting and casino-style gambling through federally regulated event contracts or on decentralized finance platforms. He said the bill also failed to provide “an unequivocal statement” that federal commodities law cannot preempt IGRA, tribal gaming laws, tribal-state compacts, or state gaming laws.
The Senate vote comes one day after tribal organizations participated in a roundtable discussion with CFTC Chairman Michael Selig, where tribal leaders again raised concerns about the rapid expansion of prediction market gambling products that operate outside the established tribal and state gaming regulatory systems.
“We have said from the beginning that this issue is bigger than one bill,” Bean said. “The fundamental question is whether the federal government will respect the sovereign authority of tribal nations and the gaming framework Congress established through IGRA.”
Bean emphasized that no federal agency and no new financial marketplace should be allowed to create a back door for nationwide gambling that ignores tribal sovereignty.
In the IGA’s statement, the association said it will continue to call for federal legislation and regulatory action that protect IGRA and tribal-state compacts from federal preemption, preserves the sovereign authority of tribal nations to regulate gaming, and prohibits federally regulated prediction markets from offering sports betting and casino-style gambling through event contracts or decentralized finance platforms.
The IGA also called for meaningful government-to-government consultation with tribal nations before federal actions are taken that could affect tribal gaming rights or tribal economies.
“This vote gives Congress an opportunity to get this right,” Bean said. “Any future legislation dealing with digital assets, prediction markets or federal commodities law must begin with a clear principle: Tribal sovereignty is not negotiable.”
