AGA and Indian Gaming Association Tell Congress Sports Betting Prediction Markets Have Cost $1.2 Billion in Tax Revenue

The American Gaming Association and the Indian Gaming Association told a House Agriculture subcommittee this week that sports betting offered through prediction markets has drained more than $1.2 billion in gaming tax revenue from states and tribal governments since platforms like Kalshi and Polymarket began listing sports event contracts. The testimony came during a hearing titled “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets,” held by the House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development.

The hearing marked the first dedicated House session on the exchanges now offering sports-related trading contracts in all 50 states, including markets where traditional sports betting remains illegal. Notably absent from the witness table was anyone representing the prediction market industry itself — no one from Kalshi, Polymarket, or any competing exchange testified.

What the AGA and Tribal Leaders Told Lawmakers

Indian Gaming Association Chairman David Bean and AGA Senior Vice President of Government Relations Chris Cylke served as the lead witnesses arguing that sports contracts on prediction markets are functionally identical to regulated sports betting products — covering moneylines, totals, parlays, and player props — without the licensing, taxation, or consumer protection obligations that legal sportsbooks must meet.

Cylke told the subcommittee that sports contracts on platforms like Kalshi and Polymarket “make a mockery of Congressional intent” and strip bettors of protections that licensed sportsbooks are required to provide, including age verification, geofencing, responsible gambling tools, and suspicious-activity reporting. He also raised sports integrity concerns, noting that licensed sportsbooks monitor betting patterns for signs of manipulation in ways prediction markets are not required to replicate.

Bean’s written testimony went further on the financial toll, stating that prediction markets have taken more than $1.2 billion from state governments over the past 18 months, with tribal governments reporting similar 5-10% revenue losses. Bean compared the impact to eliminating the entire annual budget of the Bureau of Indian Affairs, arguing that tribal governments rely on gaming revenue to fund government programs, services, and revenue-sharing agreements with state and local governments.

A Hearing Without the Other Side

The subcommittee also heard from Solidus Labs CEO Asaf Meir and two former CFTC attorneys, Robert Schwartz and Carl Kennedy, who addressed the agency’s legal authority over event contracts. Schwartz, a former CFTC general counsel, testified that the agency already “has the tools it needs” under the Commodity Exchange Act to disallow exchanges from listing problematic contracts, and that Congress has directed jurisdiction over that dispute to the CFTC — not to courts or individual states.

The hearing arrives as the CFTC advances a proposed rulemaking, issued June 10, 2026, that would amend Regulation 40.11 and add a new framework for evaluating event contracts tied to “enumerated activities” such as gaming. It also comes amid an escalating legal standoff in Michigan, where a state judge extended a ban on Kalshi’s sports contracts through August 12 and raised daily fines to $500,000, only for the CFTC to invoke emergency authority ordering Kalshi to keep honoring Michigan trades regardless.

Kalshi has previously dismissed the AGA’s revenue-loss figures as “fake math from casinos… worried about losing their monopoly power,” pointing to the traditional gaming industry’s own record $78.7 billion in revenue last year. The dispute shows no sign of resolving soon, with prediction market volume on sports-related contracts continuing to grow — Kalshi’s World Cup winner market alone has topped $1.9 billion in total volume, more than double this year’s Super Bowl betting handle on the platform.

Why It Matters for Bettors

For everyday bettors comparing options, the distinction goes beyond a Washington policy fight. Licensed sportsbook operators are required to verify age and location before allowing a wager, something prediction markets are not currently mandated to enforce the same way. As Congress and the CFTC sort out how sports event contracts should be classified, the outcome could reshape which platforms bettors can legally use — and which ones face new restrictions in the months ahead.