American Gaming Association Seeks Ban of Sports Event Contracts on Prediction Markets

The American Gaming Association (AGA) is calling on the U.S. government to ban prediction market exchanges from providing event contracts related to sports. 

A significant danger to the legal sports betting sector has arisen from wagering exchanges that permit users to bet money against each other on various topics, ranging from the weather forecast for tomorrow to bitcoin prices. The online platforms assert they provide derivatives, which are financial instruments traded as investments. 

The Commodity Futures Trading Commission (CFTC), a separate entity of the federal government overseeing derivatives markets, is examining the optimal ways to regulate prediction markets and assess the legality of contracts linked to sports events. 

AGA President and CEO Bill Miller is optimistic that the CFTC will bar prediction exchanges such as Kalshi, Crypto.com, and Robinhood from providing sports contracts. Describing the decision as “crucial” and one that would back the forecast that sports-related contracts would “jeopardize years of state-driven advancements in the regulation of sports wagering,” Miller calls for a prohibition of such offerings. 

“The CFTC must reject the classification of sports event contracts as investment products and reinforce the integrity of the existing state-regulated sports betting market. Anything less risks destabilizing a system carefully built to balance economic opportunity with consumer protection and support for states and communities,” Miller wrote in an op-ed published in the Sports Bussiness Journal. 

“The CFTC must act now to protect states’ rights and prevent an unregulated national betting market from taking root,” the AGA leader continued.

Investments or Wagers? 

The distinction between gambling and investing blurred with the emergence of the internet, which made electronic trading platforms widely accessible. Warren Buffett, one of the most successful investors in history, remarked last autumn that the “markets currently display much more casino-like behavior than they did in my youth.” 

Kalshi and comparable exchanges assert that they merely enable the public to wager money on event outcomes, similar to how investors risk funds purchasing company shares based on their predictions about the next quarterly report of the business. Miller, on the other hand, argues that forecasting the result of a sports event is undeniably tied to betting.

"These platforms argue that these contracts are investment vehicles, not wagers or bets. This is sports betting, and if you don’t believe it, their own advertising presents it quite clearly,” Miller wrote. “The reality is that this effort amounts to a backdoor for national sports betting that threatens state authority, consumer protections, and the integrity of the legal sports betting industry.” \

Upcoming Roundtable 

The CFTC plans to conduct a “prediction markets roundtable” later this month. A date has not been established yet. 

The CFTC has been receiving feedback from interested parties since the beginning of last month. Organizations that provided feedback backing the CFTC's prohibition of sports-related prediction market contracts, alongside the AGA, include GeoComply, a geolocation company that helps mobile sportsbooks identify the locations of their bettors. Major League Baseball, the Indian Gaming Association, and US Representative Dina Titus (D-Nevada) have likewise advocated for a prohibition. 

CFTC Acting Chair Caroline Pham has voiced her dissent regarding sports contracts on prediction exchanges. 

“Unfortunately, the undue delay and anti-innovation policies of the past several years have severely restricted the CFTC’s ability to pivot to common-sense regulation of prediction markets,” Pham said last month. “Despite my repeated dissents and other objections since 2022, the current commission interpretations regarding event contracts are a sinkhole of legal uncertainty and an inappropriate constraint on the new administration.”