Congress is set to hear sharply conflicting testimony Tuesday (July 21) over who should regulate sports prediction markets and whether Congress should step in to redefine them as gambling instead of federally regulated financial products.
The committee is expected to debate whether sports event contracts should continue under the oversight of the Commodity Futures Trading Commission through the Commodity Exchange Act or instead fall under the state and tribal gaming systems that oversee traditional sports betting.
Witnesses defending the current framework say the CFTC already has the legal authority it needs to regulate these contracts. Representatives from the American Gaming Association and the Indian Gaming Association, however, are asking lawmakers to either prohibit the products or place significant limits on them.
Testimony obtained before the hearing shows both gaming organizations arguing that prediction markets have effectively created nationwide sports betting under federal commodities law while avoiding the state and tribal regulatory structures established after the Supreme Court’s 2018 Murphy v. NCAA ruling.
“Our concern is narrow and urgent,” AGA President Chris Cylke writes. “A growing number of platforms are using so-called ‘sports event contracts’ to offer nationwide sports betting under the guise of federally regulated financial products.”
The AGA says it supports financial innovation in general but argues that sports event contracts “function as sports wagers in every meaningful sense” while operating outside regulatory frameworks “that Congress, states, tribes, and voters have spent decades building.”
AGA calls on Congress to redefine sports prediction markets
The American Gaming Association is asking Congress to reinforce what it describes as three fundamental principles governing sports wagering.
“First, sports wagering is gambling, regardless of whether it is described as an event contract, prediction market, futures contract, or financial instrument,” the testimony states.
The organization also argues that responsibility for gambling policy should continue to rest primarily with states and tribal governments. In addition, it says “CFTC-registered entities should not be permitted to offer sports betting or casino-style gambling nationwide through self-certified contracts.”
The AGA ultimately asks lawmakers to reaffirm “that sports betting belongs within state and tribal gaming frameworks — not on prediction market platforms operating under federal commodities law.”
The Indian Gaming Association makes a similar case, arguing that prediction markets weaken both state authority and tribal sovereignty.
Chairman David Bean writes that “sports betting through prediction markets tramples on the sovereignty of tribal and state governments.”
Bean argues that decisions about gambling have historically been made at the local level rather than by federal regulators.
“Since the Supreme Court’s 2018 Murphy v. NCAA decision, tribes and states continue to debate the potential risks and rewards of whether to legalize and regulate online sports betting or maintain criminal prohibitions.”
According to the testimony, the CFTC’s current approach overrides those local policy choices.
“However, the current one-person CFTC has removed local governments from the online gambling debate, proclaiming that online sports betting is now legal on every Indian reservation and in every state,” Bean writes. “No one voted for this, and Congress did not pass a law to authorize online sports gambling.”
Industry groups push Congress to restore regulatory boundaries
Both gaming organizations argue that prediction markets look and operate much like traditional sportsbooks.
“Pull up your prediction market app and you see the same bets that are offered in every other legal sportsbook authorized by tribal and state governments,” Bean writes. “Moneylines, totals, parlays, and prop bets.”
The testimony argues that the biggest difference is not how the products function but how they are regulated.
“The only key difference is that prediction markets avoid the regulatory systems that tribes and states have established to protect consumers and the integrity of American sports.”
The IGA says state and tribal systems generally include safeguards such as minimum age requirements, responsible gambling measures, limits on certain wagers, deposit controls, and consumer protection rules.
Bean also argues that sports event contracts do not fit the traditional purpose of commodity derivatives.
“The outcome of a sporting event is not a commodity, a price index, a commercial input, an interest rate, a currency, or a financial benchmark,” the testimony states.
The association contends that sports event contracts “do not manage price risk in the manner of futures, swaps, or other hedging instruments.”
Instead, Bean argues, “They are not tied to any commercial exposure, and they do not mitigate any pre-existing risk — they create risk for its own sake.”
Gaming organizations challenge the CFTC and Kalshi approach
The Indian Gaming Association also focuses heavily on Kalshi, arguing that the company has shifted its legal position on sports event contracts.
According to the testimony, Kalshi previously argued during litigation involving election event contracts that federal law prohibited sports-related event contracts before later choosing to self-certify sports contracts.
“In January of 2025, Kalshi reversed the positions listed above by self-certifying event contracts directly related to the outcomes of sporting events,” Bean writes.
The filing reproduces statements it says Kalshi made during earlier litigation, including arguments that Congress “did not want sports betting to be conducted on derivatives markets” and that contracts involving games generally lack commercial hedging value.
The testimony also disputes Kalshi’s description of itself as a peer-to-peer prediction market.
“Kalshi and other prediction markets falsely claim that what they offer is not gambling, because there is no ‘house’ — this is their claim to innovation.”
Bean argues instead that the exchange depends on institutional market makers and proprietary trading firms, giving professional participants advantages over retail traders.
“This is not innovation — what Kalshi offers is a mirror to traditional sports gambling authorized by state and tribal governments, but without the guardrails, regulations, or oversight.”
Both the AGA and IGA are urging Congress to pass H.R. 7840, the Event Contract Enforcement Act. They argue the legislation would reaffirm state and tribal authority over sports betting while preventing federally regulated exchanges from listing sports event contracts.
“We respectfully urge this Committee to advance H.R. 7840,” Bean writes. “This bill would reaffirm existing tribal and state government authority to regulate sports betting… and quiet the chaos and federal overreach that the CFTC is fostering.”
Witnesses supporting prediction markets argue the CFTC already has authority under existing commodities law to oversee sports event contracts and maintain that additional legislation is unnecessary.
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