美众院听证会揭示体育预测市场监管分歧

Congress should not remain on the sidelines while courts, state regulators and the Commodity Futures Trading Commission (CFTC) fight over the future of sports prediction markets, the chairman of a House Agriculture subcommittee said Tuesday.

The hearing offered no clear consensus on whether sports event contracts should be treated as federally regulated derivatives or gambling products subject to state and tribal laws. But members from both parties repeatedly questioned whether the existing framework adequately protects younger traders and prevents insider trading and manipulation, as well as whether the understaffed CFTC has enough capacity to oversee the growing market.

“The commission is acting in this space,” Subcommittee Chairman Dusty Johnson (R-S.D.) said in his closing remarks. “I do not believe that the committee, that Congress, should be silent. I do think there is work for us to do here.”

The hearing, titled “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets,” brought together lawyers and a market-surveillance expert who defended the CFTC’s authority alongside representatives of the American Gaming Association (AGA) and Indian Gaming Association (IGA), who argued that platforms such as Kalshi and Polymarket are using federal registration to operate what amount to nationwide sportsbooks.

The sharpest disputes centered on whether the Commodity Exchange Act (CEA) preempts state gambling laws, the conflict between a Michigan court order and a subsequent CFTC emergency directive, and the promotion of sports contracts to customers as young as 18. Johnson said Tuesday’s hearing would not be Congress’ last examination of prediction markets and identified CFTC resources, market integrity and customer protection as issues the committee still needs to explore.

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Are sports contracts derivatives or bets?

The central disagreement was whether sports event contracts are a new category of federally regulated financial product or simply sports wagers offered under a different name.

Christopher Cylke, senior vice president of government relations at the AGA, told lawmakers the economic substance of the products matters more than the terminology platforms use to describe them.

“Let’s be clear — so-called sports event contracts are sports betting,” Cylke said. “A customer puts money on a sports outcome and gets paid if they are correct. Forty-one state attorneys general agree. These products are sports betting and must be subject to state gambling laws.”

Carl Kennedy, a derivatives partner at Katten Muchin Rosenman, rejected that premise. He argued that Congress intentionally wrote the CEA broadly enough to cover new products traded on federally regulated exchanges.

“That’s why Congress wrote the words commodity and swap broadly,” Kennedy said. “Not because it wanted a free-for-all, but because it knew new products would keep showing up, and it wanted the CFTC to be ready for them. Making room for that kind of innovation is exactly what Congress demanded of the CFTC.”

“Sports event contracts are just the newest product to walk through that door,” Kennedy added.

Robert Schwartz, a Morgan Lewis & Bockius partner who previously served as CFTC general counsel, similarly argued that federally registered exchanges operate within a comprehensive derivatives framework, not outside regulation altogether.

States and tribes warn of “backdoor sportsbooks”

Cylke said the dispute has spread across the country because prediction market platforms are using CFTC registration to bypass the state-by-state systems governing legal sports betting.

“Litigation has reached nine federal appeals courts, and lawmakers across the country are responding for one simple reason: These platforms are running backdoor sportsbooks,” he said.

IGA Chairman David Bean made a similar argument on behalf of tribal gaming interests, warning that nationwide sports event contracts threaten authority states and tribes negotiated through the Indian Gaming Regulatory Act (IGRA) and tribal-state compacts.

The classification dispute carries consequences far beyond terminology. It determines whether platforms must obtain licenses in each state, whether customers generally must be 21 to use a sportsbook or 18 to trade on a prediction market, which consumer-protection and responsible-gaming/trading standards apply and whether state and tribal regulators can prevent the contracts from being offered within their borders.

Gaming revenue continues to grow despite diversion claims

Cylke and Bean also argued that sports prediction markets are diverting business from state-regulated sportsbooks and tribal gaming operations while avoiding taxes, licensing fees and revenue-sharing obligations.

“Sports betting on prediction markets like Kalshi and Polymarket makes a mockery of congressional intent, is stripping your constituents of important consumer protections, and costing your communities a fortune in lost tax revenue,” Cylke said.

The AGA, Cylke said, estimated that states and tribes have lost more than $1.2 billion in gaming tax revenue since prediction markets began offering sports event contracts.

“This sum is snowballing by the day, and that money should be supporting education, infrastructure, public safety, responsible-gaming programs, and tribal communities,” Cylke said.

But regulated gaming revenue has continued to grow alongside prediction markets. The AGA reported that commercial gaming revenue reached a record $78.7 billion in 2025, up 9.2% from the previous year. Sports betting revenue increased 22.8% to nearly $17 billion, while taxes generated by state-regulated sportsbooks climbed 32.4% to $3.71 billion.

The National Indian Gaming Commission also reported Tuesday that tribal gaming revenue increased 5.3% to a record $46.2 billion in fiscal year 2025.

Those figures do not rule out revenue diversion, particularly because sports event contract trading expanded substantially in 2026 and the cited revenue totals cover 2025. Sportsbooks, tribes and state governments could still be collecting more in the absence of prediction markets. But the record results provide little evidence, at least so far, of a broad contraction in regulated gaming.

Prediction markets open sports trading to younger customers

The dispute also extended to who can use the platforms. CFTC-regulated prediction market platforms generally permit customers at 18, while nearly all state-regulated sportsbooks require users to be at least 21.

“Marketing sports contracts as investing is also misleading and dangerous,” Cylke said, “especially for younger consumers who may believe betting on sports is a financial strategy rather than entertainment with a real risk of loss.”

Bean accused prediction market operators of targeting younger customers through social media and presenting sports trading as a way to make money.

“Prediction markets target young people and those in jurisdictions where sports betting is prohibited,” Bean said. “They advertise on TikTok and hire influencers who claim that they are a side hustle without revealing the true risks of gambling.”

“In fact, one CEO attempted to equate sports contracts to financial literacy,” he continued. “This is both misleading and dangerous. Today, thanks to a one-person agency, every teenager with a smartphone can now lose their shirt without leaving their house or dorm room. We’re only starting to see the devastating impact on our kids’ mental health and financial security.”

Supporters of prediction markets disputed the broader claim that the platforms operate without customer safeguards. Asked whether CFTC-regulated exchanges lacked age verification, know-your-customer (KYC) rules and integrity monitoring, Asaf Meir, co-founder and CEO of Solidus Labs, said that had not been his experience.