States have lost $1 billion due to prediction markets: Gaming association
The rise of prediction markets has had a significant impact on state tax revenue, with the American Gaming Association estimating that states have missed out on over $1 billion in tax revenue as a result. This loss of revenue has consequences for communities, as the taxes collected on regulated gambling help fund important community projects.
In a recent appearance on CNBC’s “Squawk Box,” American Gaming Association president and CEO Bill Miller highlighted the impact of prediction markets on state and tribal revenue. Miller described prediction markets as “backdoor sports betting,” emphasizing that they are not regulated in the same way as traditional sportsbooks. This lack of regulation has led to states and tribes losing out on crucial revenue that could benefit their communities.
States have raised concerns about prediction markets, arguing that sports event contracts offered by these platforms amount to sports gambling and should be subject to local regulatory frameworks. However, the Commodity Futures Trading Commission (CFTC) views these contracts as falling within its jurisdiction to regulate swaps and derivatives, leading to legal disputes between states and the CFTC.
President Donald Trump recently voiced his support for the CFTC’s jurisdiction over prediction markets, highlighting the importance of maintaining regulatory oversight in this space. The Office of Management and Budget is currently reviewing a proposal for the CFTC to regulate prediction markets, further emphasizing the need for clear regulatory guidelines in this emerging industry.
Prediction market platforms, on the other hand, argue that they offer economic utility beyond sports betting, with contracts related to macroeconomic events and politics. The Coalition for Prediction Markets, which represents platforms like Kalshi, Coinbase, and Robinhood, has disputed the American Gaming Association’s estimates, questioning the validity of the $1 billion figure.
In response to the criticism, Kalshi spokesperson Elisabeth Diana dismissed the association’s claims as “fake math” driven by concerns from the casino industry about losing market share. Diana emphasized the growth of the U.S. gaming industry, pointing to record-high revenue figures and suggesting that prediction markets offer a fairer and less predatory alternative to traditional casinos.
Overall, the debate surrounding prediction markets and their impact on state tax revenue continues to unfold, with stakeholders on both sides advocating for their respective positions. As regulatory authorities and industry players navigate this evolving landscape, the future of prediction markets remains uncertain but undoubtedly impactful on the broader gambling industry.
