A group of 12 Democratic senators has called on Congress to amend the CLARITY Act to prevent federally regulated prediction markets from offering sports betting and casino-style products. In a July 17 letter, the lawmakers argued that the current legislation could weaken tribal gaming protections and reduce states’ authority over gambling regulation.
The letter was sent to the leaders of the Senate Banking Committee and the Senate Agriculture Committee as negotiations continue over the Digital Asset Market Clarity Act and the Digital Commodity Intermediaries Act. The senators said the bills, as drafted, would expand opportunities for decentralized finance platforms to offer prediction and wagering products outside existing tribal and state gaming frameworks.
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The lawmakers opened their letter by writing: “We write with urgency regarding the continued lack of proper regulation over prediction markets and the resulting circumvention of state and tribal gaming regulatory frameworks.”
They added that the CLARITY Act and DCIA “will only serve to exacerbate these issues” by reducing oversight of decentralized finance betting protocols.
According to the letter, prediction market operators currently rely on federal commodities law to offer sports and event contracts nationwide while avoiding state licensing systems. The senators wrote: “Currently, prediction markets are misusing federal commodity and derivatives rules to offer nationwide sports and event wagering, completely ignoring state and tribal gaming licenses and regulations.”
The lawmakers also argued that expanding the Commodity Futures Trading Commission’s authority without additional safeguards would undermine protections established under the Indian Gaming Regulatory Act (IGRA) and state police powers.
Their proposal would amend the Commodity Exchange Act by prohibiting registered entities from listing contracts tied to sporting events, athletic performance or casino-style games. It would also specify that nothing in the legislation overrides the IGRA, the Unlawful Internet Gambling Enforcement Act, the Wire Act or existing state and tribal gaming laws.
Tribal Concerns Remain Central
The senators said prediction markets threaten the regulatory system established under IGRA, which Congress enacted in 1988 to support tribal economic development and self-government.
The letter states that gaming revenue has become a major source of funding for healthcare, education, housing, public safety and other government services in tribal communities. It also points to economic gains on reservations following the expansion of tribal gaming, including higher incomes and lower poverty rates.
The lawmakers warned that decentralized finance exemptions proposed in the legislation could allow online sports wagering and casino-style products to migrate onto platforms outside existing regulatory structures.
Bill Faces Uncertain Outlook
The letter was signed by Sens. Tammy Baldwin, Richard Blumenthal, Maria Cantwell, Martin Heinrich, Mark Kelly, Patty Murray, Alex Padilla, Gary Peters, Jacky Rosen, Brian Schatz, Adam Schiff and Tina Smith.
The CLARITY Act, backed by Sen. Cynthia Lummis, continues to face an uncertain path in the Senate. Debate has also focused on revised ethics provisions and claims that the legislation could benefit President Donald Trump’s cryptocurrency interests. Reports cited in the coverage said Trump earned more than $1 billion in cryptocurrency profits during 2025.
As Senate negotiations continue, the lawmakers are urging Congress to include explicit protections preserving tribal sovereignty and state gaming authority before advancing the legislation.
Source:
“Senators urge sports, casino prediction markets ban in CLARITY Act bill”, heinrich.senate.gov, Jul 17, 2026
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