Prediction market platforms and the American Gaming Association (AGA) are clashing over claims that states and tribal governments have lost more than $1 billion in gaming tax revenue. The AGA’s online tracker, “State Gaming Tax Dollars Lost Since Prediction Markets Began Offering Sports Event Contracts,” counts potential revenue states could have received if prediction market trades were subject to state taxes and licensing. Kalshi was the first prediction market to offer sports-event contracts before Super Bowl 59 in 2025, operating under federal oversight by the Commodity Futures Trading Commission (CFTC).

Kalshi dismissed the AGA’s calculation as misleading. Elisabeth Diana, a spokesperson for Kalshi, told RotoWire, “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 added, “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.”

AGA’s Position on Lost Revenue

AGA President Bill Miller reinforced the $1 billion estimate during a CNBC appearance, framing the issue as a broader public revenue concern. “We recently had 41 Attorney’s General from around the country weighing in saying the (Commodities Futures Trading Commission) plays an important role in the nation’s economy, but they’re not the regulator of national sportsbooks. 41 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,” Miller said.

The AGA contends that prediction market platforms like Kalshi, Polymarket, and Robinhood are bypassing state and tribal regulations, offering sports-event contracts without paying the licensing fees, regulatory costs, or taxes that legal sportsbooks provide,  More than a dozen states and Native American tribes have initiated litigation, issued cease-and-desist letters, or introduced legislation aiming to limit or ban prediction markets. Federal prosecutors and regulators have also intervened in cases, including charges against a Google engineer for over $1.2 million in Polymarket trades.

Legal and Political Oversight

The dispute has drawn federal and political attention. President Donald Trump expressed support for the CFTC’s authority over prediction markets, criticizing state officials for attempting to regulate them. In a Truth Social post, Trump wrote, “Under my leadership, we are setting ‘rules of the road’ that are the Gold Standard for the States. We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!” Christie now serves as a strategic adviser to the AGA and aligns with the association’s push for state-level oversight.

State-level legislation has continued to expand. Minnesota recently passed a ban on prediction markets, prompting federal litigation to block enforcement. At least 15 states have introduced measures in 2026 targeting these platforms. Meanwhile, the CFTC maintains that federally regulated event contracts fall under its authority, creating a jurisdictional standoff between state regulators, tribal governments, and federally licensed prediction market operators.

The conflict extends beyond taxation. Traditional gambling oversight ensures consumer protection, responsible gaming programs, and monitoring for fraud or match-fixing, protections that critics argue are not consistently applied to prediction market trades. Tribal gaming compacts, which often grant exclusive rights to tribes, are also challenged when federally regulated prediction markets operate in the same states.

The rapid growth of prediction markets has added urgency. Trading volume increased from approximately $1.2 billion in early 2025 to over $20 billion by early 2026, attracting substantial investment, including a $2 billion funding round from Intercontinental Exchange into Polymarket. The AGA and the wider gambling industry emphasize that even with high overall revenue, states and tribes are at risk of losing funds that could support public projects. The dispute is expected to continue in statehouses, courts, and federal oversight forums as regulators, lawmakers, and market operators define the boundaries of this expanding financial sector.