The American Gaming Association has issued a report claiming that U.S. states and tribal communities have forfeited over $1 billion in tax revenue due to the rapid expansion of prediction markets. Bill Miller, the association’s president and CEO, argues that these platforms function as unregulated sportsbooks, effectively bypassing the stringent tax and oversight frameworks that govern traditional casinos and sports betting operators. According to the association, this loss of revenue directly impacts funding for community projects and threatens the economic stability of established gaming entities.

At the heart of the conflict is a jurisdictional battle over how these platforms should be classified. While the Commodity Futures Trading Commission (CFTC) maintains that prediction market contracts fall under its authority as swaps and derivatives, state regulators and casino advocates contend that these platforms are essentially offering sports gambling services without proper local oversight. The tension has led to a series of legal challenges, with states attempting to enforce local gambling laws while the CFTC has moved to protect its regulatory domain.

Political interest in the matter has intensified, with former President Donald Trump recently emphasizing the importance of maintaining CFTC jurisdiction over these markets. Meanwhile, the industry is currently under review by the Office of Management and Budget regarding potential new regulatory standards. The debate has drawn in major financial players, including Kalshi, Coinbase, and Robinhood, who argue that prediction markets provide unique economic utility beyond simple wagering.

Representatives for the prediction market industry have dismissed the $1 billion figure as “fake math,” suggesting that established casinos are merely attempting to protect their market dominance. Industry spokespeople argue that prediction markets offer a fairer and less predatory alternative to traditional gaming, noting that the U.S. gaming industry recently achieved record-breaking revenues. As the legal and regulatory landscape continues to shift, the divide between traditional gaming operators and the emerging prediction market sector remains a significant point of contention in the financial and political spheres.