American Gaming Association Urges Ban on Sports Contracts in Prediction Markets

A significant challenge has emerged for the legal sports gambling industry, stemming from wagering exchanges that enable users to bet against each other on various topics, including weather forecasts and bitcoin prices. These online platforms present themselves as offering derivatives—financial instruments that are traded as investments.

The Commodity Futures Trading Commission (CFTC), an independent federal agency overseeing derivatives markets, is currently evaluating how to effectively regulate prediction markets and assess the legality of contracts linked to sports events. Bill Miller, the President and CEO of the American Gaming Association (AGA), is advocating for the CFTC to prohibit prediction exchanges such as Kalshi, Crypto.com, and Robinhood from offering contracts associated with sports events. He describes the potential decision as “pivotal,” warning that supporting these prediction markets could undermine years of state-led initiatives in regulating sports betting. Miller emphasizes the need for a ban on such contracts, stating, “The CFTC must reject classifying sports event contracts as investment products and uphold the integrity of the state-regulated sports betting market. Failing to do so risks destabilizing a system designed to balance economic opportunity with consumer protection and support for local communities,” as he highlighted in an op-ed for Sports Business Journal.

Miller further urged the CFTC to act promptly to safeguard states’ rights and prevent the establishment of an unregulated national betting market. The distinction between gambling and investing has blurred with the rise of the internet, particularly with the advent of electronic trading platforms. Warren Buffett, one of history’s most successful investors, remarked last fall that today’s markets exhibit “far more casino-like behavior than they did in my youth.” Kalshi and similar exchanges argue that they simply allow the public to wager on event outcomes, similar to how investors purchase shares based on predictions about a company’s forthcoming quarterly reports. However, Miller contends that forecasting the outcome of sporting events is fundamentally an act of gambling.

These platforms maintain that their contracts are investment products rather than wagers. Miller counters this by stating, “This is essentially sports betting, a fact made clear by their advertising. The truth is, this initiative serves as a backdoor to national sports betting, jeopardizing state authority, consumer protections, and the integrity of the legal sports betting industry.”

The CFTC plans to host a “prediction markets roundtable” later this month, with a date yet to be determined. Since early last month, the CFTC has been gathering input from interested parties. Alongside the AGA, organizations such as GeoComply, which assists mobile sportsbooks with geolocation, have submitted comments urging the CFTC to ban sports-related prediction markets. Major League Baseball, the Indian Gaming Association, and U.S. Representative Dina Titus (D-Nevada) have also expressed their support for the ban.

CFTC Acting Chair Caroline Pham has voiced her opposition to sports contracts on prediction exchanges, stating, “Regrettably, the prolonged delays and anti-innovation policies of previous years have severely hampered the CFTC’s ability to implement sensible regulations for prediction markets. Despite my ongoing dissent and concerns since 2022, the current interpretations regarding event contracts create significant legal uncertainty and hinder progress for the new administration.”