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The American Gaming Association's running counter of "lost" state and tribal revenue from federally regulated prediction markets rolled past $1 billion this week, giving casino and sportsbook lobbyists the kind of round-number headline that travels easily from a CNBC interview to a statehouse press conference. AGA President Bill Miller went on the network to frame the figure as money diverted from education funds, pension contributions, and responsible-gaming programs — the type of public-spending framing state attorneys general have spent more than a year trying to land in court.
The platforms themselves rejected the math outright. Kalshi called the estimate "fake math from casinos" worried about losing their monopoly, while the Coalition for Prediction Markets said the AGA's underlying sources couldn't be located. That back-and-forth matters because the underlying jurisdictional fight has produced split rulings in nearly every prediction-market case, and the CFTC has sided with the platforms in every regulatory action brought against them so far.
Why it matters
The $1 billion number is doing political work that pure legal arguments haven't been able to. New York alone pulled roughly $1.3 billion from online sports betting in 2025 at a punishing 51% tax rate — the highest in the country — illustrating how much revenue states have a direct incentive to defend. The federal government already collects a 0.25% excise tax on legal sports-betting handle, and the AGA argues prediction-market activity sidesteps both the federal and state stacks entirely. Forty-one attorneys general from across the political spectrum have already urged the CFTC to retreat from what they call regulatory overreach, and 15 states have introduced legislation this year to rein in the platforms. Minnesota became the first to pass an outright ban, signed by Governor Tim Walz, with a federal challenge aimed at blocking the August 1 effective date.
The fight has now reached the White House.
Frequently asked questions
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What is the AGA's $1 billion claim against prediction markets?
The American Gaming Association says federally regulated prediction markets like Kalshi and Polymarket have cost states and tribes more than $1 billion in lost tax revenue. AGA President Bill Miller framed the figure as money diverted from education, pensions, and responsible-gaming programs.
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Why are states fighting with the CFTC over prediction markets?
States argue event contracts on sports outcomes are gambling and should be licensed and taxed like sportsbooks. The CFTC treats the platforms as federally regulated derivatives exchanges, and has sided with them in every regulatory action so far — a split that has now drawn 41 attorneys general and a bipartisan Senate…
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Why did DraftKings, FanDuel, and Fanatics leave the AGA?
They resigned in late 2025 to pursue their own CFTC-regulated event-contract products, which let them reach customers in states where their conventional sportsbooks are restricted or banned. The split has left the AGA representing a thinner coalition of land-based casinos and tribal operators.
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What is the Prediction Markets Are Gambling Act?
It is a bipartisan bill introduced in March by Senators John Curtis and Adam Schiff that would bar any CFTC-registered venue from listing contracts resembling a sports bet or casino game. The bill signals congressional appetite to push event contracts out of the federal-derivatives lane and back into state gambling…
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How big has prediction-market trading actually become?
Monthly trading volume climbed from roughly $1.2 billion in early 2025 to more than $20 billion by early 2026. That scale pulled a $2 billion strategic investment from Intercontinental Exchange into Polymarket at an $8 billion valuation, and is the reason the regulatory fight has escalated so quickly.
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