AGA Takes Stand Against Sports Prediction Markets

The rapid expansion of prediction markets into sports-related contracts has prompted a forceful response from the American Gaming Association. In fact, it has begun campaigning publicly against what it sees as an unregulated form of sports betting.

In recent weeks, the AGA has purchased advertising space on social media platforms and YouTube to raise awareness of its position. There is clearly growing concern among regulated gaming stakeholders as these exchanges gain visibility in the US market.

A Dispute Over Definition and Regulation

Core to this debate is a fundamental disagreement over classification. Prediction market platforms such as Kalshi, Polymarket, and Crypto.com frame their offerings as financial derivatives rather than gambling products. The AGA, however, maintains that contracts tied to sports outcomes function in the same way as traditional sports wagers, regardless of their labels. From their perspective, the distinction is semantic rather than substantive.

It argues that prediction markets offering sports contracts are bypassing the state and tribal regulatory systems that govern legal sportsbooks. By operating under federal commodities regulation instead of state gaming laws, the AGA believes these platforms avoid critical consumer protections and local oversight mechanisms that are designed to safeguard players and preserve confidence in the integrity of sporting events.

This regulatory gap creates risks not only for bettors but also for the broader sports ecosystem. Beyond that, they have outlined that sports contracts traded on prediction markets could expose competitions to heightened integrity threats.

Taxation is another major point of contention. According to the association, prediction markets do not contribute state gaming taxes or the federal excise tax that legal sportsbooks are required to pay on every wager. The association has argued that this imbalance allows prediction market operators to compete without shouldering the same financial obligations, while states and local governments lose a meaningful source of revenue. Any diversion of betting activity away from the regulated system weakens a framework that directly supports local communities.

Federal Oversight and an Unresolved Regulatory Future

Prediction market operators continue to defend their model by pointing to their federal oversight. Platforms such as Kalshi hold Designated Contract Market licenses issued by the Commodity Futures Trading Commission, which regulates derivatives markets, including futures and options. While DCMs have traditionally focused on commodities and financial instruments, newer entrants have expanded the concept to include contracts based on real-world events, from political elections to cultural outcomes, and now sports.

This evolution has not gone unnoticed by the wider gambling industry. Major sportsbook operators, including DraftKings and FanDuel, have explored exchange-style products or partnerships, reflecting how quickly the boundary between financial markets and sports wagering is shifting. The AGA views this convergence as further evidence that sports contracts on prediction markets should fall under established gaming regulations rather than operating in a separate federal angle.