TLDR
- The AGA’s State of the States 2026 report groups prediction markets with illegal gambling operations and sweepstakes casinos
- 81% of gaming executives surveyed view prediction markets as a major threat to regulated gaming
- DraftKings, FanDuel, Fanatics, and Bet365 have all left the AGA over the past year
- 16 states took action against sports event contracts in 2025, including lawsuits and cease-and-desist orders
- The CFTC has filed lawsuits against multiple states, arguing it has exclusive jurisdiction over event contracts
The American Gaming Association is stepping up its campaign against sports prediction markets. The trade group’s latest reports paint event contracts as a direct threat to the regulated gaming industry in the United States.
The AGA released its State of the States 2026 report this week. In it, the organization placed prediction markets in the same category as sweepstakes casinos, offshore sportsbooks, and illegal gaming operations.
AGA President and CEO Bill Miller said the industry mobilized to address “the growing threat of prediction markets offering sports betting outside of established state and tribal gaming law.”
Miller also said the fight “goes to the heart of the American gaming framework,” pointing to consumer protections, responsible gaming standards, and tax revenue distribution.
The report found that 16 states took action against sports event contracts during 2025. Those actions included cease-and-desist orders, lawsuits, and regulatory opinions declaring that sports event contracts amount to unauthorized sports wagering.
Five states passed legislation in 2025 to ban sweepstakes casinos. Those states were California, Connecticut, Montana, New Jersey, and New York. Indiana and Maine followed with ban bills in 2026.
Gaming Executives Sound the Alarm on Prediction Markets
The AGA also released its Gaming Industry Outlook Spring 2026 survey last week. That report found 81% of gaming executives viewed prediction markets as a very large threat to the regulated gaming industry.
The survey showed that 46% of executives said federal regulatory concerns are limiting their operations. That number was up from 29% in the third quarter of 2025.
Meanwhile, 42% of executives pointed to competition from new forms of gaming as a major factor limiting operations. That figure rose from 25% in the prior survey.
Executives responding to the survey raised concerns about “unregulated and untaxed competition” and the potential impact on industry credibility.
The AGA estimated that illegal gambling generates roughly $53.9 billion per year. The group said that costs states more than $15 billion in lost tax revenue. Those numbers do not include tax revenue lost from sports event contracts offered through prediction markets.
Major Operators Break With the AGA
While the AGA pushes back against prediction markets, several of its former members are moving in the opposite direction. DraftKings, FanDuel, Fanatics, and Bet365 have all left the AGA over the past year.
FanDuel, DraftKings, and Fanatics have each entered the prediction market space. Executives from DraftKings and Flutter highlighted prediction markets as customer acquisition tools and growth opportunities during recent earnings calls.
Bet365 said it left the AGA because the organization focuses too heavily on the retail casino industry. The company described itself as a “digital-first operator.”
The split marks a shift from the years following the Supreme Court’s 2018 PASPA decision. Back then, sportsbook operators and the AGA were largely aligned during the expansion of legalized sports betting.
U.S. sports betting expansion is also slowing down. The AGA report noted that 2025 was the first year since the PASPA ruling that no new state legalized sports betting. Commercial sports betting revenue still grew 22.6% year over year to $16.89 billion in 2025.
States are also raising taxes on operators. Illinois enacted what the AGA called a “first-of-its-kind tax on every mobile sports bet” in 2025.
The legal battle over prediction markets is now playing out in courts across the country. Platforms like Kalshi, Robinhood, and Crypto.com have faced state-level enforcement actions. They have also filed federal lawsuits arguing that sports event contracts fall under the CFTC’s exclusive jurisdiction.
The CFTC itself has filed lawsuits against Arizona, Connecticut, Illinois, New York, and Wisconsin. The agency has also submitted amicus briefs in cases in Nevada, Massachusetts, and Ohio.
