Senators and tribal gaming regulators are pressing Congress to state clearly that sports betting and casino-style wagering remain under state and tribal authority, as the Senate considers changes to the Clarity Act during the week of Aug. 4.
The dispute centers on prediction markets, online platforms where users buy and sell contracts tied to future events. While such markets have historically focused on elections, economic data and public events, contracts linked to sporting results have drawn increasing resistance from state regulators and tribal gaming operators. Their concern is that platforms operating under federal commodities law could offer products that closely resemble sports betting without complying with state licensing rules, tribal-state compacts, consumer protections or local gambling bans.
At a Senate Indian Affairs Committee roundtable Tuesday, Tehassi Hill, vice chairman of the Indian Gaming Association, urged lawmakers to amend the Clarity Act to prevent “sports and casino gambling through prediction markets.” Hill called for language that would place those products under state and tribal gaming law rather than the Commodity Futures Trading Commission’s authority.
Sen. Tina Smith, a Minnesota Democrat, said Congress could add similar protections to either the Clarity Act or the Farm Bill. Her proposal would clarify that the Commodity Futures Act does not override the Indian Gaming Regulatory Act or agreements that allow tribal nations and states to govern gaming operations jointly.
A jurisdiction fight over sports contracts
The clash has turned prediction markets into a jurisdictional test between the CFTC, state gaming agencies and tribal governments. Federal commodities law gives the CFTC authority over designated derivatives markets, while state and tribal governments have long controlled gambling activity within their borders, including sports wagering after the Supreme Court struck down the federal sports-betting prohibition in 2018.
Prediction-market operators argue that event contracts can be regulated as financial products. Gaming regulators counter that a contract paying out when a team wins, loses or covers a point spread functions like a sportsbook wager regardless of the technology or legal label behind it.
That distinction carries substantial commercial consequences. Sportsbooks must generally obtain state licenses, meet responsible-gambling requirements, pay state taxes and follow rules on betting integrity. Tribal operators work within the Indian Gaming Regulatory Act and negotiated compacts that govern what games may be offered and how revenues are shared. A federally regulated prediction market offering comparable sports contracts could bypass much of that structure, according to tribal and state critics.
The Indian Gaming Association’s position places particular emphasis on tribal sovereignty. Tribes operate gaming facilities and online wagering systems under a legal framework built around federal recognition of tribal governmental authority. If the CFTC’s jurisdiction is treated as exclusive for sports-related event contracts, tribal leaders argue that federally regulated platforms could reach customers in jurisdictions where tribes and states have established separate gaming rules.
CFTC asserts exclusive authority
Michael Selig, the CFTC chair, has asserted that the agency holds “exclusive jurisdiction” over prediction markets. The Trump administration has supported Selig’s effort to strengthen the agency’s authority over the sector, describing CFTC oversight as critically important.
Selig has also sued several states as the conflict has moved beyond policy arguments and into courtrooms. States have objected to prediction-market products they believe violate local gambling laws, particularly contracts tied to sporting events. The CFTC has simultaneously pursued rulemaking that could shape the boundaries of federally supervised event-contract trading.
The issue has become more urgent as major platforms gain scale. Polymarket and Kalshi have both grown substantially and are valued in the billions of dollars, according to the material provided. Both companies have sought CFTC oversight, reflecting the industry’s preference for a national regulatory route rather than a state-by-state gambling regime.
For lawmakers, the practical question is whether a sports contract should be governed primarily by its market structure or by the activity it enables. A platform may characterize a contract as a tradeable derivative, but state and tribal officials argue that consumers experience it as a wager on a game’s outcome. The answer could determine whether prediction-market operators need to navigate the same legal systems as sportsbooks and casinos.
Clarity Act faces a narrow Senate window
Gaming groups see the Clarity Act as a potential legislative vehicle for protecting state and tribal control. The bill has been under consideration for roughly a year following House passage, but its Senate prospects face a compressed timetable before the chamber’s expected recess at the end of the week and a political calendar increasingly focused on November’s elections.
John Boozman, the Republican chair of the Senate Agriculture Committee, has acknowledged concerns surrounding prediction markets, including underage gambling and insider trading. Yet Boozman opposes attaching prediction-market provisions to either the Clarity Act or the Farm Bill. He has argued that the subjects should be handled separately and indicated that he does not expect such amendments to move forward.
That stance leaves tribal and state advocates seeking support from senators willing to force a clearer statutory boundary between commodities regulation and gaming law. Smith has indicated that legislation could also emerge next month to protect tribal authority if an amendment cannot be secured during the current legislative push.
A narrowly drafted provision could preserve CFTC authority over traditional event contracts while excluding products that mirror sports betting or casino gambling. Such language would likely face fierce opposition from prediction-market companies, which have built their expansion strategies around federal oversight and nationwide access.
Without congressional action, courts and CFTC rulemaking may increasingly determine where prediction markets end and regulated gambling begins. The result will shape whether sports-related contracts can be offered across state lines under a federal commodities framework or must comply with the licensing and tribal compact systems that govern conventional wagering.
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