AGA’s $1B claim fuels state fights over prediction markets

The American Gaming Association says a running counter on its website has reached more than $1 billion, a tally it used in televised appearances to argue that states and tribal governments are losing tax revenue that would otherwise fund education, pensions and responsible-gaming programs.

Prediction-market platforms let customers trade yes-or-no contracts priced like odds on real-world outcomes, including sports results. Because the Commodity Futures Trading Commission regulates those venues at the federal level, they have operated in all 50 states, including places where state-licensed sportsbooks face restrictions. The AGA represents land-based casinos, sportsbooks and tribal operators that pay state licensing fees and taxes and says prediction-market contracts bypass those systems.

The platforms reject the AGA estimate. Kalshi labeled the $1 billion figure ‘fake math from casinos,’ while the Coalition for Prediction Markets said it could not locate the sources behind the association’s calculation.

The dispute has moved to courts and legislatures. The CFTC has filed lawsuits against Arizona, Connecticut, Illinois, New York, Wisconsin and Minnesota to defend its federal oversight of the venues. Minnesota enacted an outright ban this year that Governor Tim Walz signed; the federally regulated platforms have filed a challenge to block the law before its August 1 effective date. At least 15 other states have introduced measures this year to restrict or regulate the contracts.

In Congress, Senators John Curtis and Adam Schiff introduced the Prediction Markets Are Gambling Act in March, a bipartisan bill that would prevent CFTC-registered exchanges from listing contracts that resemble sports bets or casino games. Forty-one state attorneys general have urged the CFTC to reduce its role, calling federal regulation in this area regulatory overreach.

The gambling industry has split over the issue. DraftKings and FanDuel left the AGA late last year, and Fanatics resigned after launching its own event-contract platform. Monthly trading on prediction-market platforms rose from about $1.2 billion in early 2025 to more than $20 billion by early 2026. Intercontinental Exchange invested $2 billion in Polymarket at an $8 billion valuation.

The traditional gambling industry reported $78.72 billion in revenue and $18.09 billion in gaming taxes in 2025. New York taxes online sports betting at 51% and collected roughly $1.3 billion in 2025. The federal government collects a 0.25% excise tax on legal sports-betting handle. The AGA argues that prediction markets operating outside state licensing and tax rules reduce those revenue streams.

Regulatory and consumer-protection questions are central to the debate. Bets placed through licensed state sportsbooks operate within complaint processes, responsible-gaming programs and monitoring systems designed to detect match-fixing or insider trading. Critics say those safeguards apply only partially, if at all, to federally regulated platforms. Tribal officials and states have raised concerns that prediction markets bypass tribal compacts that grant exclusive gaming rights.

Political connections have appeared in public comments. A post from former President Donald Trump called it ‘critically important’ for the CFTC to retain exclusive authority over prediction markets. Donald Trump Jr. holds a paid advisory role at Kalshi and is an investor in Polymarket, links that have drawn attention during the policy debate.

Litigation and rulemaking are likely to continue in state legislatures, attorney-general offices, tribal governments and federal courts as officials consider whether and how to apply state gambling laws to prediction-market platforms.