The American Gaming Association (AGA) claims that states have now lost over $1 billion in tax revenue to sports prediction markets.
The organization, which comprises casinos, tribal gaming groups, and sports betting operators, is ramping up its efforts to curb the growth of sports prediction markets.
“Prediction market platforms are offering illegal sports betting nationwide outside the state and tribal regulatory frameworks that protect consumers,” said the AGA’s site dedicated to sports event contracts.
Underneath, a ticker shows the amount of state gaming tax dollars lost since prediction markets began offering contracts on sports events. The figure exceeded $1 billion on Thursday.
It is unclear how the AGA generates this figure. States without legal sports betting allow residents to wager on prediction markets, but they have not set tax rates.
The main point appears to be that prediction markets continue to offer US citizens across most states the chance to wager on sports, including almost all esports events.
AGA’s Three Points Against Prediction Markets
The AGA’s site goes on to state three main complaints about prediction markets:
- Framing Sports Wagering like Investing is Misleading Consumers
- Consumers Expect Oversight That Doesn’t Exist
- Prediction Market Advertising Has Surged and Does Not Include Responsible Gaming Safeguards
It claims that users are being misled into believing they are investing, when in reality they are engaging in sports betting. Additionally, platforms lack regulation, as the Commodity Futures Trading Commission (CFTC) has not enforced strict rules on operators, unlike state gambling regulators.
Finally, platforms are not held to the same responsible gambling standards as traditional betting platforms. Kalshi recently signed up to the National Council on Problem Gambling (NCPG) and urged other prediction markets to do the same.
However, the company’s ads have been criticized for promoting irresponsible gamnbling. For example, one TikTok ad showed the caption, “I was about to be unable to pay my rent, but I got two years’ of rent through Kalshi’s predictions. It’s amazing!”
This kind of ad would be unlikely to get past regulatory scrutiny at a licensed sportsbook. Most states also force operators to display responsible gambling messages.
Battle Against Prediction Markets Intensifies
The AGA and other groups are ramping up their efforts against prediction markets. Last week, a group named FairPredicts launched a campaign focusing on the lies it claims prediction markets, particularly Kalshi, tell customers.
Kalshi responded by sending a cease-and-desist letter to the organization, which has not revealed its source of funding. Kalshi claims it is funded by casino-backed interest groups, such as members of the AGA.
Kalshi also filed a lawsuit against Rhode Island last week, and the state responded with its own lawsuit against Kalshi.
The CFTC has this week filed its own lawsuit against Rhode Island, alleging the state is overstepping its boundary and that prediction markets are under the agency’s exclusive jurisdiction. It has done the same in Arizona, Connecticut, Illinois, and Minnesota.
“CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets. This power grab ignores the law and decades of precedent,” said CFTC Chairman Michael Selig in a press release.
Trump Offers Support To CFTC and Prediction Markets
President Donald Trump also sent a strong message in support of the CFTC and prediction markets this week. Trump Media has partnered with Crypto.com, while his son, Donald Trump Jr., serves as a strategic advisor to both Kalshi and Polymarket.
“It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive,” Trump wrote in a post on his social media platform Truth Social.
“Under my leadership, we are setting ‘rules of the road’ that are the Gold Standard for the States. We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!”
Chris Christie serves as an advisor to the AGA. He was also instrumental in paving the way for legal sports betting in the US, winning a decisive Supreme Court ruling when serving as Governor of New Jersey.
The AGA looks set to continue its battle with prediction markets. DraftKings and FanDuel have already left the organization over their involvement in the industry, which has become increasingly divisive.