Gaming industry asks Congress to block "legal loophole
The battle for the integrity of the regulated market in the United States has opened a new front. In a joint letter sent to the Senate and the House of Representatives, the two most powerful organizations in the sector, the AGA (representing commercial gaming) and the IGA (representing tribal gaming), have called for urgent legislative intervention.
The goal is clear: to prevent so-called "prediction markets" and crypto asset platforms from using the inaction of the Commodity Futures Trading Commission (CFTC) to offer sports betting under the guise of "event contracts."
The regulatory "Trojan Horse"
The industry's central argument is that these platforms are exploiting a regulatory gray area. Since January of last year, there has been a proliferation of contracts that replicate mechanics identical to traditional sports betting — including parlays and speculation on college athlete transfers — but are marketed as financial instruments.
For the AGA and the IGA, this constitutes a direct threat to the post-PASPA model (the 2018 ruling that allowed state regulation of betting). While licensed operators must comply with strict state regulations, geolocation, and taxation, these new platforms operate in all 50 states (even where betting is illegal) and allow access to those over 18 without the Know Your Customer (KYC) and Anti-Money Laundering (AML) controls required by law.
A legislative opportunity: The Crypto Act
The associations see a unique window of opportunity in the current debate on cryptocurrency market structure legislation. In the letter, they urge lawmakers to include explicit provisions prohibiting the use of CFTC-registered platforms for gaming activities.
The criticism of the CFTC is forceful: the industry accuses the commodities regulator of "regulatory inaction" that not only weakens state laws and tribal sovereignty but also jeopardizes consumer protection.
The economic weight of legality
To put into perspective what is at stake, the letter reminds Congress of the regulated sector's weight:
- Economic impact: US$ 329 billion annually.
- Tax revenue: US$ 53 billion in taxes.
- Employment: 1.8 million jobs.
- Oversight: More than 8,400 state and tribal regulatory bodies.
The entities argue that allowing prediction markets to operate outside this ecosystem is not only unfair competition but also drains hundreds of millions of dollars that should be allocated to infrastructure, education, and public services through gaming taxes.
Systemic risks
Beyond economic competition, the letter warns of legal and social dangers. The associations point out that these contracts violate the spirit of the Wire Act and the Indian Gaming Regulatory Act (IGRA). Furthermore, they alert that the lack of oversight in these prediction markets facilitates the manipulation of sporting events, money laundering, and speculation on sensitive events such as armed conflicts or humanitarian tragedies.
Backed by 39 state attorneys general who have already expressed their opposition to these contracts, the gaming industry sends a clear message to Washington: financial innovation cannot be an excuse for illegal gambling.
Tags: United States, USA, predictive markets, predictive markets regulation