AGA Escalates Prediction Market Pushback as Industry Divide Grows

The American Gaming Association (AGA) is increasingly escalating its campaign against sports prediction markets, using both its annual State of the States report and a recent executive survey to frame event contracts as a growing threat to the regulated gaming industry.

Notably, the AGA’s increasingly vocal anti-prediction-market stance comes even as several major sportsbook operators continue entering the sector.

The latest escalation came in the AGA’s newly released State of the States 2026 report, where the organization repeatedly positioned prediction markets alongside sweepstakes casinos, offshore sportsbooks, and illegal gaming operations.

AGA President and CEO Bill Miller wrote:

We mobilized the industry and our partners to address the growing threat of prediction markets offering sports betting outside of established state and tribal gaming law.”

Miller added:

This fight goes to the heart of the American gaming framework: consumer protections, responsible gaming standards, and the fair distribution of tax revenue depend on a clear, state-regulated system.”

AGA Escalates Anti-Prediction Market Messaging

In the “Illegal Gaming” section of the State of the States, the AGA groups prediction markets together with unregulated gaming, such as sweepstakes casinos and “skill games,” along with illegal offshore operators.

According to the report, 16 states took action against sports event contracts during 2025, including:

• Cease-and-desist orders
• Lawsuits against operators
• Regulatory opinions holding that sports event contracts constitute unauthorized sports wagering.

The report also noted that five states — California, Connecticut, Montana, New Jersey, and New York — passed legislation in 2025 explicitly prohibiting sweepstakes casinos. While not mentioned, Nevada passed legislation explicitly allowing regulators to pursue enforcement against such platforms. Additionally, in 2026, Indiana and Maine passed ban bills.

The State of the States messaging follows the AGA’s Gaming Industry Outlook Spring 2026 report, released last week. That report also identified prediction markets as one of the industry’s biggest threats. According to the survey, 81% of gaming executives viewed prediction markets as a “very significant threat” to the regulated gaming industry.

The Industry Outlook report also found that 46% of executives said federal regulatory concerns are limiting operations, up from 29% in Q3 2025. Meanwhile, 42% cited “competition from new forms of gaming” as a major factor limiting operations, up from 25% in the prior survey.

Executives’ short-answer responses included concerns such as “Unregulated and untaxed competition,” “Threat of further expansion into gaming markets,” and “Impact industry credibility.”

The report also cited AGA estimates that illegal gambling generates approximately $53.9 billion annually. That deprives states of more than $15 billion in tax revenue.

Notably, these figures do not include “the many hundreds of millions in sports wagering tax revenue being lost due to sports event contracts offered through prediction markets.”

Industry Rift Emerges Over Prediction Markets

AGA’s growing rhetoric follows several of the nation’s largest online gaming operators leaving the organization. Over the past year, DraftKings, FanDuel, Fanatics, and Bet365 have all exited the AGA.

The companies have cited differing strategic priorities and business models. FanDuel, DraftKings, and Fanatics have entered the prediction market sector.

Recently, executives from both DraftKings and Flutter highlighted prediction markets as potential customer-acquisition tools and growth opportunities during their quarterly earnings calls.

Meanwhile, in a statement previously provided to Gambling Insider regarding its departure from the AGA, Bet365 said:

As a digital-first operator, bet365 has pulled back from the AGA due to the organization’s focus on the retail casino industry.”

Historically, sportsbook operators and the AGA were largely aligned during the expansion of legalized sports betting following PASPA’s repeal. Prediction markets, however, are increasingly exposing emerging divisions between traditional casino-aligned interests and digital-first operators seeking alternative wagering models.

Growing interest in prediction markets also comes as U.S. sports betting expansion begins to slow.

According to the AGA report, 2025 marked the first year since the Supreme Court’s 2018 PASPA decision in which no new state legalized sports betting. Despite that slowdown, commercial sports betting revenue still grew 22.6% year-over-year to $16.89 billion in 2025.

The report also highlighted increasing state tax pressure on operators. That includes Illinois’ “first-of-its-kind tax on every mobile sports bet” enacted in 2025.

Prediction Markets Become Gaming’s Next Major Regulatory Battle

The AGA’s intensified messaging on prediction markets comes amid expanding litigation across multiple states.

Platforms such as Kalshi, Robinhood, and Crypto.com have not only faced cease-and-desist orders, lawsuits, and regulatory challenges from state gaming regulators but have also aggressively gone on the offensive in court. They have filed multiple federal lawsuits arguing that sports event contracts fall under federal commodities law and the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction.

The CFTC has also recently intensified its legal push, arguing that event contracts fall under its exclusive jurisdiction. The agency has filed lawsuits against Arizona, Connecticut, Illinois, New York, and Wisconsin. It has also filed amicus briefs in cases in Nevada, Massachusetts, and Ohio.