The American Gaming Association on Thursday crossed a symbolic threshold in its campaign against federal prediction market platforms, announcing a $1 billion estimate of tax revenue lost to Kalshi, Polymarket, and similar venues operating under Commodity Futures Trading Commission oversight.
AGA President Bill Miller went on CNBC to warn that states and tribes were losing money that would otherwise fund community programs. The timing coincided with a spike in prediction market activity: monthly trading volume reached more than $20 billion by early 2026, up from $1.2 billion in early 2025.
Kalshi immediately rejected the figure. “This is fake math from casinos,” the platform said in a statement. The Coalition for Prediction Markets added that the AGA’s underlying sources for the $1 billion estimate could not be located.
The dispute reflects a widening fracture in the gambling industry. DraftKings and FanDuel resigned from the AGA in November, followed by Fanatics in December, all three drawn by federal regulation that allows them to reach customers in states where traditional sportsbooks face restrictions or bans. Licensed sportsbooks operate under state oversight including complaint processes, responsible-gaming safeguards, and monitoring for match-fixing or insider activity. Prediction market platforms, by contrast, operate in all fifty states under CFTC authority and are not subject to the same licensing and tax regimes.
State officials have spent more than a year arguing that prediction market contracts on sports outcomes are gambling and should be taxed accordingly. New York’s online sports betting tax rate is 51 percent and generated $1.3 billion in revenue for the state in 2025. Prediction markets currently pay no comparable levy.
The regulatory conflict has reached Congress and the White House. Senators John Curtis and Adam Schiff introduced the Prediction Markets Are Gambling Act in March, which would bar CFTC-registered venues from listing contracts resembling sports bets or casino games. Forty-one attorneys general urged the CFTC to retreat from what they described as regulatory overreach. Minnesota became the first state to pass an outright ban on prediction markets under a bill signed by Governor Tim Walz; that ban is set to take effect on August 1.
President Trump posted on Truth Social that it was “critically important” for the CFTC to keep exclusive authority over prediction markets. That stance aligns with federal regulation but contrasts with his son Donald Trump Jr.’s paid advisory role at Kalshi and investment in Polymarket, which has secured a $2 billion investment from Intercontinental Exchange and holds an $8 billion valuation.
Court rulings in prediction market cases have been split, though the CFTC has sided with platforms in every new case brought before regulators. Fifteen states have introduced legislation to restrict prediction markets since the platforms began expanding their user bases and trading volumes.
