The American Gaming Association is leading a coalition of tribal groups and hospitality unions urging the Senate to insert language into pending crypto market-structure legislation that would bar prediction markets from offering sports wagers. The push squarely targets Kalshi and Polymarket.

The letter, dated June 16 and first reported by Semafor, was signed by the AGA, the Indian Gaming Association, the AFL-CIO’s Hotel and Gaming Trades Council and UNITE HERE. The signatories want lawmakers to use the CLARITY Act to reaffirm that “sports betting falls outside the CFTC’s remit and cannot be offered through prediction market platforms,” per the letter text.

The Coalition’s Argument

Prediction markets have “fueled the largest expansion of gambling in U.S. history over the past 18 months, without voter approval or legislative authorization,” the coalition wrote, per Semafor. The letter frames sports event contracts as a regulatory end-run around state and tribal gaming statutes.

The AGA estimates states have lost roughly $1 billion in tax revenue to prediction markets since the start of 2025, a figure it shared with CNBC last month. Prediction-market operators contest that estimate.

The coalition is asking senators to clarify in CLARITY that the Commodity Futures Trading Commission’s authority over event contracts excludes sports wagering, leaving that activity to state regulators and the framework that governs licensed sportsbooks and tribal casinos.

What CLARITY Currently Does

The CLARITY Act is the leading federal crypto market-structure bill, designed to assign jurisdiction over digital assets between the CFTC and the SEC. It does not directly address prediction markets, but the gaming coalition argues the bill is the most realistic legislative vehicle in the current Congress for adding a sports-betting carve-out.

The Senate Banking Committee advanced the legislation last month on a 15-9 vote, and a full Senate vote remains the next major step.

The Sponsors Already on Record

The most prominent sitting senator pressing the issue is Maria Cantwell of Washington, the ranking Democrat on the Senate Commerce Committee. At a May 20 subcommittee hearing, Cantwell drew a parallel between prediction-market growth and pre-2008 subprime lending, and pressed AGA chief executive Bill Miller on the impact to tribal casinos.

“Indian country is scared,” Miller responded at the hearing, citing the 680,000 jobs tribal gaming supported in 2025.

Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act in March, a standalone bill that would prohibit sports and casino-style event contracts on federally registered platforms. That bill has not advanced. Folding similar language into CLARITY, the coalition’s letter suggests, is now the faster path.

The Targets

Kalshi and Polymarket are the two operators most exposed. Kalshi raised $1 billion at a $22 billion valuation, The Defiant previously reported, and both platforms launched perpetual-futures contracts this spring under CFTC oversight. Sports contracts have been a major volume driver for both.

Institutional flow has followed. Galaxy Digital opened an OTC prediction-markets desk in May, executing a $10 million trade on CLARITY Act passage odds.

The Broader Jurisdictional War

The legislative push lands inside a multi-front fight over who regulates event contracts. The CFTC has sued New Mexico and sued Wisconsin to block state gambling regulators from reaching federally registered prediction markets, arguing that the Commodity Exchange Act gives the agency exclusive jurisdiction over registered event contracts.

States have pushed back. Washington state sued Kalshi in March, arguing the platform “attempts to skirt state law by branding its betting platform as a ‘prediction market.'” Enforcement actions or lawsuits have followed in Ohio, Nevada, New Jersey, Maryland, Montana, Illinois, New York, Connecticut, Arizona and Wisconsin.

A tribal coalition filed amicus briefs earlier this month at the Sixth Circuit arguing prediction markets undermine tribal gaming systems established under federal law. Former CFTC Chair Gary Gensler filed a separate brief arguing sports event contracts do not meet the Dodd-Frank Act’s definition of swaps because they are not used to hedge economic risk.

What’s at Stake for Operators

If a sports carve-out reaches CLARITY’s final text, Kalshi and Polymarket would lose a product line that has driven recent volume growth and pulled in institutional liquidity providers like Wintermute. If it does not, the CFTC framework remains the federal anchor and the state-by-state litigation continues.

The Senate has yet to schedule a floor vote on CLARITY. Industry advocates and the prediction-market coalition will likely have their respective amendments ready when it does.