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Senators and tribal gaming leaders are pressing Congress to clarify that sports prediction markets tied to sports and casino events should remain subject to state and tribal gaming laws, rather than falling solely under federal commodities oversight.
The discussion centers on whether lawmakers could add language to either the Clarity Act or the Farm Bill to state that the Commodity Futures Trading Commission does not preempt the Indian Gaming Regulatory Act or tribal-state gaming compacts.
Senators debate whether Congress should narrow CFTC reach
At a Senate Indian Affairs Committee roundtable, Sen. Tina Smith said Congress may already have legislative vehicles available to address the issue.
She said lawmakers could clarify that the Commodity Futures Trading Commission and the Commodity Exchange Act do not override IGRA or tribal-state contracts, adding that “prediction markets need to abide by existing law.”
Indian Gaming Association Vice Chairman Tehassi Hill argued that sports and casino gambling offered through prediction markets should not be allowed to bypass existing gaming rules.
But there is not yet agreement on the best path. Sen. John Boozman pushed back on folding the issue into broader crypto legislation, saying prediction markets and crypto are separate matters and that supporters would need to build a stronger case.
States and tribes challenge the federal position
The CFTC, under Chair Michael Selig, has argued that the agency has exclusive jurisdiction over prediction markets and has challenged several state enforcement actions in court. The Trump administration has backed that position, saying federal oversight of prediction markets is critically important.
That stance has drawn wider opposition from states. In June, attorneys general from 44 states urged the CFTC to withdraw and rewrite proposed Rule 40.11, arguing the agency exceeded its authority under the Commodity Exchange Act.
For readers tracking the space, the dispute matters because it could determine whether sports-event contracts are treated more like federally supervised derivatives or like gambling products governed under state and tribal law.
Trading volume keeps growing as the legal fight continues
Even as the jurisdiction fight intensifies, activity on major prediction platforms continued to climb. Kalshi, Polymarket, and Polymarket US handled a combined $50.59 billion in notional trading volume in July.
Kalshi accounted for about $37.7 billion of that total, or roughly 74.5%. Open interest across the three exchanges fell from about $2 billion at the start of July to around $1.2 billion by month-end, a drop linked to the settlement of FIFA World Cup contracts after the tournament ended.
What comes next is still unclear. Congress has not yet decided whether the Clarity Act or Farm Bill will carry language on prediction markets, and the broader fight over CFTC authority is still being contested by states and tribes.
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Source: As reported by crypto.news.
