U.S. gaming industry and tribal groups have urged lawmakers to add language to the Senate-pending CLARITY bill banning sports and casino-style prediction markets.

Cointelegraph, a blockchain outlet, reported on Tuesday that the groups also pressed lawmakers to make clear the Commodity Futures Trading Commission (CFTC) has no authority to regulate sports betting.

Semafor reported that the Indian Gaming Association (IGA) and the American Gaming Association (AGA), among other sports betting-related groups, delivered their views to the Senate together with labor groups. They argued that because the CLARITY bill, a digital asset market structure measure, is under Senate review, it must clearly draw a line so sports-related event contracts cannot be offered through prediction market platforms.

A central issue is who will regulate sports event contracts offered by prediction market platforms. Under Chairman Michael Selig, the CFTC has asserted “exclusive jurisdiction” over prediction markets. The agency has backed platforms such as Kalshi and Polymarket while responding to lawsuits and enforcement actions by state-level gaming regulators targeting them.

Gaming industry groups, by contrast, see prediction markets as effectively creating a new form of expanded gambling. In a joint letter, the groups said, “Our organizations may differ on other issues, including gambling policy, but we share concerns that over the past 18 months prediction markets have sparked the largest expansion of gambling in U.S. history without voter approval or legislative authorization.”

The groups also challenged the CFTC’s role directly. The letter said the CFTC was created to oversee commodity and derivatives markets and was not designed to regulate gambling and sports betting. It said that with strong state and tribal regulatory systems already in place, the CFTC lacks both the expertise and infrastructure to police nationwide sports betting.

Tax revenue has also emerged as a point of contention. The American Gaming Association estimated that since prediction markets began offering sports event contracts, state gaming regulators have lost about $1.08 billion in tax revenue. That is why the industry is highlighting fiscal losses alongside regulatory authority in the legislative debate.

The CLARITY bill would shift some digital asset regulatory and enforcement authority from the Securities and Exchange Commission (SEC) to the CFTC. The bill passed the House of Representatives in July 2025, but has been delayed by concerns over stablecoin revenue structures and ethics issues, and tokenised stocks. Some lawmakers see a chance it could pass Congress by August.

In this situation, clashes between federal regulators and state regulators could intensify. Some experts and industry advocates say the CFTC and Selig have signalled they are willing to sue state authorities that move to crack down on prediction markets, and that it could ultimately reach the U.S. Supreme Court.

In its 2018 Murphy v. National Collegiate Athletic Association (NCAA) ruling, the U.S. Supreme Court recognised states’ authority to regulate sports gambling. Kalshi, Polymarket and the CFTC argue that event contracts on prediction market platforms qualify as “swaps” and that their services and products fall under CFTC jurisdiction. As a result, Senate review of the CLARITY bill is expanding beyond a reshaping of digital asset regulation into a renewed debate over the boundary between sports betting and prediction markets.