AGA denounces that prediction markets have cost states and tribes more than $1 billion in tax revenue.
The American Gaming Association (AGA) estimates that states have lost $1 billion in tax revenue due to the rise of prediction markets, according to the trade group's latest report. President and CEO Bill Miller also said that the platforms are currently not being properly regulated at the federal level.
The growing dispute over prediction market products that offer yes/no event contracts has led to an escalating regulatory battle. The battle involves state gambling authorities, who argue that prediction markets are effectively indistinguishable from gambling; the Commodity Futures Trading Commission, which oversees the emerging sector at the federal level; and the companies that operate the platforms, who maintain that regulation falls exclusively under federal jurisdiction.
"These are states and tribes that are literally losing a billion dollars today in state and tribal revenues that would otherwise go towards funding important community projects," he said, also referring to the consequences for revenues from Native American casinos.
In turn, the American Gaming Association, the trade association representing the regulated commercial gambling industry in the U.S., says that prediction market exchanges have deprived states and tribal governments of revenue that could have supported taxes, infrastructure, essential services, and community projects. Its live tracker puts the total at just over $1 billion, with the number continuing to rise.
The dispute revolves around whether contracts for sports-related events should be treated as federally regulated swaps and derivatives or as sports betting products subject to state and tribal gambling rules.
Several states have sued platforms, including Crypto.com, Kalshi, and Polymarket, arguing that they are offering sports betting outside of local regulatory frameworks. The CFTC has responded by suing states it says are interfering with its authority. Minnesota has outright banned prediction markets, a move that now faces a legal challenge from the CFTC.
President Donald Trump said in a Truth Social post on Tuesday that the CFTC's jurisdiction over prediction markets should be maintained. The Office of Management and Budget is also reviewing a proposal for the CFTC to regulate prediction markets.
AGA President and CEO Bill Miller told CNBC's "Squawk Box" on Thursday that 41 attorneys general had weighed in to say that the CFTC has an important role in the economy, but should not act as a regulator of national sports betting. He said the issue was not about the AGA or the gaming industry, but about the revenue losses affecting states and tribes.
🚨BREAKING🚨 States have now lost more than $1 billion in tax revenue due to illegal prediction market sports betting siphoning funds that should be going to education, public safety, infrastructure, and other critical community priorities.
Learn more➡️ https://t.co/O4aQwVVILD pic.twitter.com/tMHoJJiJ1F
— American Gaming Association (@AmericanGaming) May 28, 2026
“It’s about states and tribes that are literally losing $1 billion in state and tribal revenue that would otherwise go towards funding important community projects and paying taxes to those states,” Miller said.
Miller described prediction markets as "backdoor sports betting," arguing that the platforms operate like sports betting without comparable state-level oversight. The AGA also said that prediction market platforms ignore election decisions, consumer protections, state and tribal laws, licensing requirements, and taxes.
Some states are exploring fiscal responses. Kentucky is considering a 17,25% tax on transaction fees for forecast market operators. Iowa is evaluating $20 million in licenses, $100.000 in annual fees, and a 20% tax on adjusted revenue. Pennsylvania is considering licensing fees and revenue taxes for yes/no swaps.
Companies in the prediction market reject the comparison to sports betting, saying their products have economic utility, including contracts linked to macroeconomic and political events. The Coalition for Prediction Markets, which represents platforms like Kalshi, Coinbase, and Robinhood, questioned the AGA's estimate in X, writing: "Sources not found."
Kalshi's spokesperson, Elisabeth Diana, also challenged the AGA's estimate, calling it "fake casino math" and arguing that prediction markets are "fairer, safer and less predatory than casinos."
