U.S. gaming groups are urging the Senate to add language to the CLARITY Act that would block sports and casino-style prediction markets from operating under federal crypto market structure ru
U.S. gaming groups are urging the Senate to add language to the CLARITY Act that would block sports and casino-style prediction markets from operating under federal crypto market structure rules.
The push brings the fight over Kalshi, Polymarket and event-contract platforms directly into Congress’s crypto legislation debate. The American Gaming Association, Indian Gaming Association, tribal groups and labor unions want lawmakers to make clear that sports wagers cannot be repackaged as federally regulated financial contracts.
The coalition argues that sports prediction markets have expanded betting access nationwide without state approval, tribal compact protections or the consumer safeguards required of licensed sportsbooks.
The American Gaming Association and Indian Gaming Association have been pressing Congress to prevent prediction markets from offering sports event contracts that resemble gambling products.
Their joint letter to lawmakers argues that these markets undermine state gaming laws, tribal sovereignty and regulated operators that must comply with age checks, licensing, taxation and responsible-gaming rules.
The latest Senate push seeks to attach that position to the CLARITY Act, the broader crypto market structure bill now moving through Congress. If adopted, the language could prevent prediction market operators from using federal commodities regulation as a route into nationwide sports betting.
That would directly affect platforms that have built major liquidity around sports outcomes. Polymarket has already become one of the most visible crypto-native betting layers during the World Cup, with large accounts placing multi-million-dollar positions on single matches.
Prediction market operators argue that event contracts are derivatives and fall under the Commodity Futures Trading Commission. State gaming regulators and casino groups argue that a sports outcome contract is still a sports bet when the economic exposure depends on which team wins.
That jurisdictional split has allowed platforms to grow quickly in areas where traditional sportsbooks face state-by-state licensing limits. Critics say the result is a shadow sports-betting market with weaker rules. Supporters say prediction markets create transparent, exchange-based pricing around real-world events and should not be forced into the same framework as sportsbooks.
The debate has accelerated as sports markets become larger, more liquid and more visible. The same pressure has also pushed platforms to strengthen controls around insider trading, data integrity and prohibited participants.
The battle now overlaps with crypto’s broader regulatory agenda. The CLARITY Act has already become a key fight over market structure, including how digital assets, exchanges and intermediaries should be supervised.
A sports-market ban inside the CLARITY Act would be a major setback for platforms trying to build event-contract businesses around mainstream sports, casino-style outcomes and other wager-like products.
It would also protect state-regulated sportsbooks from federally regulated competitors that can operate across state lines. That is why gaming groups are pushing the issue before the Senate floor process rather than waiting for separate gambling legislation.
A separate bipartisan proposal, the Prediction Markets Are Gambling Act, already seeks to prohibit CFTC-registered entities from listing sports-bet-like or casino-style contracts. Adding similar language to the CLARITY Act would give the restriction a faster and broader legislative vehicle.
The next signal will come from the Senate’s version of the bill. If sports prediction-market language is added, platforms such as Kalshi and Polymarket will face a direct congressional threat to one of their fastest-growing product categories. If it is left out, the fight will continue through CFTC rulemaking, state enforcement cases and separate gambling-focused legislation.
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