AGA Estimates Event Contracts Cost States Up to $1 Billion

(AsiaGameHub) –   The American Gaming Association (AGA) asserts that sports prediction markets are currently causing significant tax-related issues for states, tribal entities, and licensed gambling operators.

Good to Know

• The AGA puts the amount of lost state and tribal gaming tax revenue at as much as $1 billion.
• Bill Miller cited this number during an appearance on CNBC’s Squawk Box.
• A proposal from the Commodity Futures Trading Commission (CFTC) outlining rules for prediction markets is currently under review by the White House.

CFTC Battle Evolves Into a Tax Controversy

For months, prediction markets have maintained that sports event contracts fall under the purview of federal commodities law. Now, the AGA is urging state officials to consider the revenue implications of this issue.

Bill Miller, the AGA’s President and CEO, stated that platforms providing contracts based on game outcomes might have already resulted in states and tribes losing up to $1 billion in gaming tax revenue. He characterized the disagreement as a matter of public funding rather than merely a conflict between sports betting operators and financial market companies.

He said: “It’s about states and tribes that are losing literally a billion dollars today in state and tribal revenue that would otherwise go to fund important community projects.”

Licensed sportsbooks and casinos pay gambling taxes, licensing fees, and compliance expenses in every state where they conduct business. Prediction market platforms contend that their offerings are federally regulated event contracts, hence they do not fall under the same state-level gambling regulations.

This discrepancy has made Kalshi-style sports contracts a focus of scrutiny for the AGA, tribal gaming organizations, and state regulators. Their argument is straightforward: if a contract allows users to trade based on a game’s outcome, it is too similar to sports betting to be exempt from gaming rules.

Timing is another key factor. A CFTC proposal that covers prediction market platforms—including Kalshi and Polymarket—is currently being reviewed by the White House Office of Management and Budget. Back in January, CFTC Chairman Michael Selig scrapped an earlier plan that would have prohibited sports and political contracts, noting that the agency would draft new rules in its place.

The CFTC has also asserted in court and public statements that it has jurisdiction over federally regulated prediction markets. Former President Donald Trump supported this position in a social media post, while also criticizing Minnesota Governor Tim Walz, Illinois Governor JB Pritzker, New York Attorney General Letitia James, and former New Jersey Governor Chris Christie.