AGA Continues to be Critical of Prediction Markets in Annual Report
In a recent survey and the annual State of the States report from the American Gaming Association, the national trade group has remained critical of prediction markets.
The report stated that federally regulated prediction market platforms pose a threat to state-regulated online gaming platforms. While that may be the case, DraftKings executives said during a Q1 earnings call that the majority of its platform revenue from DraftKings Predictions comes from states where sports betting is illegal.
AGA critical of prediction markets, again
The AGA’s critical stance against prediction markets continues, according to the recent State of the States report.
At the same time as the AGA's criticism, major online sportsbooks are expanding into regulated states by adding controversial new platforms to their portfolios.
Prediction markets are regulated by the Commodity Futures Trading Commission (CFTC). However, according to the State of the States report, they are lumped into a category with sweepstakes casinos and illegal offshore sportsbooks, both of which are unregulated.
What the top dog said
In the State of the States report, AGA president and CEO Bill Miller wrote, “We mobilized the industry and our partners to address the growing threat of prediction markets offering sports betting outside of established state and tribal gaming law.”
He continued, "This fight goes to the heart of the American gaming framework: consumer protections, responsible gaming standards, and the fair distribution of tax revenue depend on a clear, state-regulated system.”
States taking action
The report noted that California, New Jersey, Connecticut, New York, and Montana passed bills to ban sweepstakes casinos in 2025, and that Indiana and Maine did so this year.
On May 13, the governor of Oklahoma vetoed a bill to ban sweepstakes casinos despite overwhelming legislative support. However, another bill to ban them passed the Louisiana House and will likely head to the governor’s desk.
Ten states have also taken formal action against prediction markets. In federal court, Nevada banned the largest prediction market platform, Kalshi, from operating in the state, while a similar ruling in New Jersey sided with Kalshi.
Tennessee, Illinois, Connecticut, and Ohio have sent cease-and-desist letters to multiple prediction market platforms. No rulings have been made yet in those states.
The CFTC is fighting back
While there has been litigation over prediction markets in multiple states, and the AGA has been critical of them, the CFTC is pushing back. It has filed federal lawsuits against states that have acted against prediction market platforms. There are active lawsuits against five states, and it has filed amicus briefs in cases in three more.
The CFTC argues that event contracts offered by prediction market platforms fall within federal commodities law and therefore are subject to federal jurisdiction. That is also the argument made by prediction market platforms that have filed lawsuits against states.
Big betting brands splitting with the AGA
As the prediction market issue has intensified, major gambling brands have exited the AGA in the last year. DraftKings, FanDuel, and Fanatics are three of those companies, and all three have prediction market products, which the AGA has been critical of.
There is now a divide between some of the major companies and the AGA. That is in stark contrast to the time when they were aligned, when sports betting expansion occurred after the Professional and Amateur Sports Protection Act of 1992 (PASPA) was repealed in 2018, making sports betting legal on a state-by-state basis.
