Will gaming industry kill or embrace prediction markets they say mimic sports betting?
Summary
The American Gaming Association released a nationwide YouGov poll finding roughly 85% of respondents view sports-focused prediction markets as gambling and believe such products should only operate under state-licensed sportsbooks and online platforms. Prediction markets, which are federally regulated by the Commodity Futures Trading Commission (CFTC), allow trading on a wide range of outcomes — from NFL winners to Fed rate-cut timing.
Kalshi, a leading prediction-market exchange, reported more than $441 million in trading over four days in early September, drawing scrutiny from state gaming regulators (including Nevada) and prompting cease-and-desist letters and lawsuits. Major sportsbook operators like DraftKings and FanDuel are also testing the waters: DraftKings applied to join the National Futures Association and FanDuel’s parent announced a CME partnership exploration.
Separately, Senator Catherine Cortez Masto reintroduced legislation to eliminate the long-standing 0.25% federal excise (handle) tax on legal sports wagers and a $50-per-employee “head” tax — a move backed by the American Gaming Association and tied to broader congressional attention to gaming taxes and deductions.
Key Points
- An AGA-commissioned YouGov survey of 2,025 registered voters found ~85% view sports prediction markets as gambling and want state regulation.
- Prediction markets operate under federal CFTC oversight and are available in all 50 states, which angers some state regulators and gaming groups.
- Kalshi reported exceptionally high trading volume (over $441m across four days), highlighting rapid growth and political attention.
- Nevada and seven other states issued cease-and-desist orders to some prediction platforms; Kalshi and others have responded with lawsuits that remain pending.
- Major sportsbooks are exploring entry: DraftKings applied to join the NFA and FanDuel/Flutter is partnering with CME for potential event contracts.
- Analysts currently view prediction markets as not yet a major competitive threat to sportsbook profits, but the space is evolving and legal outcomes remain uncertain.
- Sen. Cortez Masto reintroduced a bill to repeal the 0.25% excise tax on sports wagers and remove a $50 head tax on sportsbook employees, aiming to reduce incentives for illegal books.
- Prediction markets will be a hot topic at October’s Global Gaming Expo, despite Kalshi’s CEO not receiving a keynote slot.
Author style
Punchy — this is a snapshot of a turf war that could reshape where and how Americans place bets. Regulators, trade groups and big operators are circling; the legal and policy fallout will matter to operators, investors and regulators alike. If you follow gaming policy or the business of sports betting, read the detail.
Why should I read this?
Quick and dirty: this story explains a brewing clash between old-school state-regulated sportsbooks and fast-growing, federally overseen prediction markets. If you care about gaming rules, tax changes, who pocketing the action, or whether DraftKings and FanDuel pivot into new products — this matters. Short version: it could change who controls sports wagering in the US and how it’s taxed.