The debate over prediction markets intensified this week after the American Gaming Association (AGA) estimated that states and tribal governments have lost more than $1 billion in tax revenue as activity shifts toward platforms operating under federal oversight.
AGA President and CEO Bill Miller presented the estimate during an appearance on CNBC’s “Squawk Box,” arguing that the growth of prediction markets is reducing revenue that would otherwise flow through state-regulated sports betting systems.
“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,” Miller said.
Industry Raises Regulatory Concerns
Miller contends that sports-related contracts offered on prediction market platforms function similarly to traditional sports wagering. He described the products as “backdoor sports betting” and questioned the level of oversight currently applied to the sector.
“We also believe that the CFTC has an important role to play in the financial space in and around commodities, precious metals, and other things,” Miller said. “Where we differ strongly is the belief that the CFTC is enabling these prediction markets to operate national sportsbooks with very little to no regulatory oversight.”
The AGA also pointed to support from state officials challenging federal authority over sports-related prediction contracts.
“We recently had 41 attorneys general from around the country weighing in saying the CFTC plays an important role in the nation’s economy, but they’re not the regulator of national sportsbooks,” Miller said. “Forty-one attorneys general — that’s from every political stripe that there is in this country. It’s not about the AGA or the gaming industry, it’s about states and tribes that are losing literally $1 billion in state and tribal revenue that would otherwise go to fund important community projects and pay taxes to these states.”
Several states have sued prediction market companies, arguing that sports event contracts should be governed by state gambling laws. The Commodity Futures Trading Commission maintains that such contracts fall under federal derivatives regulation.
Operators Push Back
Prediction market companies rejected the AGA estimate and defended their business model.
The Coalition for Prediction Markets, whose members include Kalshi, Coinbase and Robinhood, challenged the calculation in a post on X, responding with: “Sources not found.”
Operators also argue that their platforms provide utility beyond sports-related contracts through markets tied to politics and economic events.
Kalshi spokesperson Elisabeth Diana disputed the figures.
“This is fake math from casinos, who are worried about losing their monopoly power. Square that ‘math’ with the fact that the US gaming industry reached a record high last year — $78.7 billion in revenue,” she said. “This is an industry that preys on people who lose. Of course they’re OK spreading lies. People are coming to prediction markets because they’re fairer, safer and less predatory than casinos.”
Federal Debate Continues
President Donald Trump stated in a Truth Social post this week that maintaining the CFTC’s jurisdiction over prediction markets is important. Meanwhile, the Office of Management and Budget is reviewing a proposal that would formalize the agency’s role in overseeing the sector.
Source:
“Gaming association says states have lost $1 billion in tax revenue due to prediction markets”, cnbc.com, May 28, 2026
The post AGA Links Prediction Markets to Tax Losses first appeared on RealMoneyAction.com.