American gambling associations are pushing for Congress to take action against sports event contracts on prediction markets through existing cryptocurrency legislation.
A group including the American Gaming Association, Indian Gaming Association and Association of Gaming Equipment Manufacturers sent a letter to the U.S. Senate pushing for a ban on sports event contracts, first reported by Semafor.
The letter argues they are a form of unregulated sports betting and threaten state gambling regulatory frameworks.
“By offering nationwide sports betting through so-called ‘sports event contracts’ and branding it as a federally regulated financial product, these platforms have bypassed state and tribal law, weakened consumer protections, and undercut a system built on local control – one that supports jobs, generates tax revenue, and funds community priorities,” the letter reads.
Industry: ban gaming in prediction markets
The industry said Congress should amend the language in the Digital Market Clarity Act to ban sports and casino-style contracts on prediction markets.
Multiple federal lawmakers have already pushed for bills to rein in the prediction markets industry.
The industry coming together lobbying Congress comes as state regulators are embroiled in dozens of lawsuits against prediction market operators and the Commodity Futures Trading Commission over regulatory jurisdiction of sports event contracts. The letter argues the CFTC was never intended to regulate gambling.
“Litigation may eventually clarify the law, but this is ultimately a question of congressional intent,” the letter reads. “Congress should not wait while this nationwide expansion of gambling continues. It should use crypto legislation to reaffirm a simple principle: sports betting falls outside the CFTC’s remit and cannot be offered through prediction market platforms.”
Full slate of signatories
Along with the AGA, IGA and AGEM, multiple other national organizations signed the letter:
- 60 Plus
- Callnnovates
- Consumer Action for a Strong Economy
- Family Business Council
- Financial Services Innovation Coalition
- Frontiers of Freedom
- Hispanic Leadership Fund
- The Hotel and Gaming Trades Council
- National Thoroughbred Racing Association
- North American Gaming Regulators Association
- The Jockey Club
Additionally, dozens of state tribal, regulatory and labor groups also signed the letter.
CFTC proposed its own rules
While battling for the jurisdiction of event contracts, the CFTC also recently advanced its own rule making process trying to assert its position. It set up a 267-page of rules for a 45-day public comment period last week.
“The CFTC will protect the integrity of our regulated markets without standing in the way of responsible innovation,” CFTC Chairman Michael S. Selig said in a release. “This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward.”
The CFTC proposed a new definition of gaming that would allow for sports event contracts on prediction markets. It would also prohibit certain event contracts that are deemed to go against public interest.
Some prediction markets operators have been proactive in working to better assert their integrity to better position themselves with lawmakers, regulators and the public.
