Prediction market platforms continue to offer sports event contracts that disregard longstanding state-and Tribal law. The claims these operators use to justify these activities are facing growing bipartisan skepticism in Washington and state capitals. Increasingly, policymakers and regulators are stepping up to reaffirm that sports wagers – in any form – fall under state and Tribal frameworks.

The big picture

Since the overturning of PASPA in 2018, voters and elected leaders in 39 states and Washington, DC have made the deliberate decision to legalize some form of sports betting – establishing robust, state-by-state frameworks. These frameworks are overseen by more than 8,400 regulators across legal gaming states nationwide. Prediction markets are now overriding these decisions and regulatory structures by relying on federal commodities law – and the inaction of the Commodities and Futures Trade Commission (CFTC) – to offer sports wagering nationwide regardless of the laws and regulations already in place.

There are now more than a dozen bills circulating on Capitol Hill aimed at broadly regulating prediction markets. The bipartisan Prediction Markets Are Gambling Act, introduced by Senator’s Adam Schiff (D-CA) and John Curtis (R-UT), addresses the critical concerns around gaming event contracts – appropriately prohibiting CFTC-registered prediction markets from accepting or listing transactions related to sports events and casino-style games.

Prediction market platforms are offering national sports betting under a different name. They argue otherwise, but their claims don’t hold up to the facts.

Myth: Sports event contracts are different from sports betting

Prediction market operators argue that because these products are structured as futures contracts, they are fundamentally different from sports wagers. Changing the back-end mechanics does not change the fact that users are wagering and risking money on the outcome of a sporting event.

Many of these operators don’t even attempt to disguise the similarity, offering an odds based view that is identical to a sportsbook. Further, when these platforms allow users to combine outcomes – for example, Portugal to win the World Cup and the Bills to win next year’s Super Bowl – the user experience entirely mirrors a parlay.

Myth: Prediction markets are simply peer-to-peer exchanges, not a “house"

These operators portray themselves as neutral platforms connecting individual users. That’s misleading. In many cases, the “peer” on the other side of a bet may be a sophisticated Wall Street trading firm or an affiliate of the exchange itself helping provide liquidity. These institutional “market makers” use advanced resources and analytics to set their odds – functionally playing the role of “the house” when these wagers are placed.

More broadly, prediction markets operate a closed-loop wagering system where the games are created, bets are facilitated and payouts are made on the same platform. That’s operating a betting platform. 

Myth: Sports event contracts serve a legitimate price and information discovery

Traditional commodities markets – on goods like corn or wheat, or even event contracts tied to underlying factors like weather – exist to help businesses hedge economic risk. There is no legitimate risk-management strategy or hedging purpose in wagering on how many points Lebron James will score in the first game of the season.

Claims about price and information discovery are hollow. Commodities markets process real underlying data – such as exports, supply information and broader economic conditions. Sports event contracts do not. They price outcomes exactly like sportsbooks do: through shifting odds based on information and demand. Calling odds-making a “discovery” does not magically transform sports betting into a commodities market or create new economic value beyond the wager itself.

Myth: Prediction markets are neutral and don’t profit like “the house”

Just because prediction markets earn transaction fees on every bet – regardless of who wins or loses – this does not make them neutral. Their revenue grows with volume. The more people bet, the more platforms profit, regardless of who “wins.” That is a business model built on facilitating gambling activity. 

Why the distinction matters

States and Tribes have built robust frameworks to regulate sports betting – with strict licensing regulations, consumer protections, integrity monitoring and responsible gaming frameworks. The CFTC was never intended to be a national gambling regulator. It was created to oversee and regulate agricultural futures and financial derivatives. Not to authorize nationwide sports betting.

Even those who helped shape modern federal derivatives law disagree with how prediction markets are using that framework. Former CFTC Chair Caroline Pham made clear in her dissent of an earlier Event Contracts Proposal that the CFTC’s authority was never meant to encroach on regulatory powers over sports betting, and that the commission “fundamentally misunderstands the law in this area and Congressional intent.”

The American Gaming Association will continue working alongside state attorneys general and other stakeholders to defend and protect state rights and tribal sovereignty in the courts and in Washington, DC. No matter how it is labeled, when money is wagered on the outcome of a sporting event, it is sports betting. And it belongs under the regulatory jurisdiction of the states and Tribes.