The American Gaming Association (AGA) and the Indian Gaming Association (IGA) have jointly urged Congress to intervene in the rapid expansion of sports event contracts offered through online prediction markets.
The two organisations sent a letter to Congress on 12 January, warning that the products function as sports betting while operating outside established gaming law.
In the letter, the AGA and IGA framed the issue as a definitive threat to state authority, tribal sovereignty, consumer protection, and the integrity of regulated financial markets.
The associations stated that since prediction market platforms began offering sports-related event contracts early last year, they have since expanded far beyond single-game outcomes.
According to their assessment, these platforms now facilitate complex multi-leg wagers similar to traditional sportsbook parlays, as well as contracts tied to nontraditional sports-related activity, including potential bets on collegiate athlete transfers.
The growth in trading volume has accelerated without formal review or approval from the Commodity Futures Trading Commission (CFTC), which the gaming groups argue has allowed the products to proliferate through regulatory inaction.
The letter reads, in part: “The CFTC’s own regulations – adopted pursuant to the Commodity Exchange Act (CEA) – prohibit event contracts regarding terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law.
“And while the gaming industry has focused our efforts on stopping unregulated sports wagering, we have seen a troubling proliferation of other concerning betting categories that seek to capitalise on tragedy, invite manipulation, and undermine public trust.”
The AGA, which saw DraftKings and FanDuel exit last year over the prediction markets controversy, and IGA emphasised that the regulated gaming provides countless benefits.
They outlined that legal gaming delivers substantial economic output, supports millions of jobs, and generates tens of billions of dollars in tax revenue annually.
Letter argues prediction markets lack discipline
At the same time, they pointed out enhanced regulatory attributes that they allege prediction markets do not have, such as age verification, operator licensing, anti-money laundering controls, and mandatory responsible gaming programmes.
The letter contrasted this system with prediction markets that allow participation nationwide for users aged 18 and older, bypassing state and tribal gaming laws and eliminating local oversight.
According to the letter, existing federal law already prohibits such contracts. The Commodity Exchange Act and CFTC regulations bar event contracts tied to gaming or activities unlawful under state or federal law.
The associations noted that dozens of state attorneys general have stated that these contracts violate their respective laws.
They further asserted that the products conflict with the Indian Gaming Regulatory Act by infringing on tribal exclusivity for gaming on tribal lands, and violate the federal Wire Act by facilitating sports wagers across state lines.
Beyond sports outcomes, the groups highlighted recent offerings tied to armed conflicts and high-profile international events, which they argue would never be permitted under state or tribal gaming rules.
They warned that these categories invite manipulation, expose consumers to harm, and risk eroding public trust while creating vulnerabilities related to money laundering and insider trading.
CFTC pressed for answers
The call for congressional action coincided with a separate letter sent the same day by US Sen. Catherine Cortez Masto and 11 other senators to CFTC Chair Michael Selig.
That letter requested detailed information on how the agency plans to address fraud, manipulation, and insider trading within prediction markets that facilitate illegal gaming nationwide.
The senators cited recent trading activity surrounding a market tied to former Venezuelan President Nicolás Maduro, where trading volume spiked shortly before his reported capture, raising concerns about misuse of nonpublic information.
The senators emphasised that, unlike licensed sportsbooks, prediction market platforms do not coordinate with gaming regulators to flag irregular betting patterns.
They also raised national security concerns, arguing that contracts related to military operations or geopolitical events could expose sensitive information to foreign adversaries.
In their communication, the lawmakers reiterated that CFTC rules implementing the Dodd-Frank Act were designed to prevent gambling through futures markets and protect the public interest from gaming activity.
During his confirmation process, Selig indicated that the agency would defer enforcement decisions on sports-related event contracts pending litigation outcomes, while acknowledging that congressional direction would be followed if enacted.