A recent federal proposal to regulate prediction market event contracts tied to sports and other gaming events has drawn significant opposition from gaming groups and states concerned about player protections and state authority.
The Commodities Futures Trading Commission (CFTC) is seeking to update its rules to oversee prediction markets, which reported a trading volume exceeding $25 billion in 2025. These markets allow participants to trade contracts based on the outcomes of events such as sports games, and potentially even slot machine spins.
Major organizations including the American Gaming Association (AGA), Indian Gaming Association (IGA), and Association of Gaming Equipment Manufacturers (AGEM) have raised concerns that the proposal would undermine established state and tribal regulatory frameworks. They warn that federal oversight by the CFTC, a financial markets regulator, could bypass the expertise and protections provided by over 8,400 state and tribal gaming regulators currently overseeing legal wagering.
For players and bettors, this shift could mean less localized oversight and potentially fewer safeguards tailored to specific jurisdictions. The IGA’s chairman described the plan as “an insult to the principles of tribal sovereignty“, emphasizing that it threatens the legal structure that has supported tribal gaming economies for nearly 40 years.
The proposed rules would allow a broad range of contracts to be listed for trading unless the CFTC intervenes within a short 10-day window. This could open the door to contracts on sensitive or controversial topics, as well as online casino games and skill-based games that mimic slot machines. AGEM’s president warned that the proposal “would open the floodgates to nationwide online casino gaming,” raising concerns about increased exposure to gambling harms without adequate regulatory controls.
Additionally, a response signed by the attorneys general of 44 states stated the proposal “takes a sledgehammer to the states’ historic power“ by centralizing authority over what gambling is permitted and how it operates nationwide. This could affect players by reducing the ability of states to tailor regulations to local needs, including responsible gambling measures and consumer protections.
The CFTC argues that the update is necessary to provide clarity and prevent offshore operators from offering unregulated event contracts that may pose risks to the public. Commission Chairman Michael S. Selig wrote in a June op-ed that the proposed changes bring “clarity, predictability, and transparency” as prediction markets continue to develop. Without these updates, offshore operators could continue to offer event contracts outside the Commission’s regulatory reach.
However, AGEM’s CEO pointed out that the CFTC lacks the expertise, staffing, and statutory mandate to regulate gaming effectively. The proposal would establish “an unprecedented new scheme managed by a single federal agency” that does not have the experience of thousands of state and tribal regulators currently overseeing legal gaming.
Players interested in regulated sports wagering should continue to monitor developments, especially in states with established frameworks. For more on sports betting regulation and player protections, see our coverage on sports betting and regulation.
For additional context on tribal gaming and related regulatory efforts, the California Nations Indian Gaming Association recently outlined goals for legalizing online sports betting in California’s 2028 ballot initiative, highlighting ongoing tribal engagement in gaming regulation (CDC Gaming).
Read the full details of the federal proposal and responses from gaming groups at CDC Gaming.
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