AGA Escalates Prediction-Markets War as CFTC and Federal Courts Push States Back

Contents

• 1. Summary
• 2. AGA Goes On Offense
• 3. CFTC's May 12 Amicus Brief
• 4. Arizona Injunction Holds
• 5. Industry Fracture
• 6. What to Watch
• Sources

1. Summary

The legal and political fight over US prediction markets escalated sharply this week. The American Gaming Association (AGA) used its newly released State of the States 2026 report and a 11 May social-media campaign to brand sports event contracts as illegal gambling. Two days later, on 12 May, the Commodity Futures Trading Commission filed an amicus brief in court reaffirming its exclusive jurisdiction over the platforms. Fresh coverage of a 5 May federal court ruling that blocked Arizona from prosecuting Kalshi continued to land throughout the week. The line between regulated sportsbooks and CFTC-supervised event contracts is now the defining policy battle in US gambling.

2. AGA Goes On Offense

The AGA's State of the States 2026 report, released on 11 May, repeatedly groups prediction markets with sweepstakes casinos, offshore sportsbooks and illegal gaming operations. The trade group's earlier Spring 2026 Gaming Industry Outlook, prepared with Oxford Economics, found 81% of surveyed gaming executives view prediction markets as a "very significant" threat to the regulated industry — the highest concern level recorded in the survey.

AGA President and CEO Bill Miller framed event contracts as "encroaching on legal, state- and tribal-regulated operators" and, in a 5 May address to the Economic Club of Las Vegas, argued the CFTC has no authority over sports wagering. The trade group's official 11 May X post: "If it looks and acts like gambling, it should be regulated like gambling." A public comment to CFTC rulemaking led by New Jersey Attorney General Jennifer Davenport now carries the signatures of 41 state attorneys general.

3. CFTC's May 12 Amicus Brief

On 12 May, the CFTC filed an amicus brief reaffirming what it claims is exclusive federal jurisdiction over prediction markets under the Commodity Exchange Act. The filing is the latest move in a campaign that includes federal lawsuits against five states — Arizona, Connecticut, Illinois, New York and Wisconsin — over their efforts to restrict CFTC-registered designated contract markets. CFTC Chair Michael Selig has publicly warned that pushing prediction markets offshore would expose US data flows to foreign manipulation.

4. Arizona Injunction Holds

On 5 May, US District Judge Michael Liburdi granted a preliminary injunction blocking Arizona from enforcing its gambling laws against Kalshi, the first US prediction market to face state criminal charges. The court's order found federal preemption on three independent grounds — field, conflict and impossibility — and stated directly: "federal law preempts state gambling laws insofar as they seek to regulate derivatives exchanged on markets regulated by the CFTC." Arizona Attorney General Kris Mayes had filed a 20-count criminal information against Kalshi in March covering both election wagering and sports contracts. Arizona is expected to appeal to the Ninth Circuit.

That ruling builds on the Third Circuit's 6 April decision affirming a similar injunction against New Jersey. State enforcement actions remain pending against Coinbase Financial Markets and Gemini Titan, which were sued by New York Attorney General Letitia James last month for a minimum of $2.2 billion and $1.2 billion respectively over the same prediction-market issue.

5. Industry Fracture

The AGA's hardline stance has cost it members. DraftKings, FanDuel, Fanatics and bet365 have all exited the trade association in the past six months as each pursues prediction-market products of its own. DraftKings' Q1 2026 earnings showed continued investment in event contracts despite the regulatory haze. Kalshi, now valued at $22 billion after a TCV-led round, struck a partnership with Madison Square Garden this month, while FIFA recently named ADI Predictstreet its official prediction market ahead of the 2026 World Cup.

6. What to Watch

A Senate Commerce subcommittee will hold the first congressional hearing on prediction markets on 20 May. The Ninth Circuit's pending decision in the Arizona/Nevada matter could either solidify CFTC supremacy or open the door for state enforcement. State-level momentum has not stalled: Oklahoma passed a sweeps-casino ban (SB 1589), the NCAA is pushing to fast-track its March Madness lawsuit against DraftKings, and the US Senate banned its own members and staff from betting on prediction markets earlier this month. For licensed sportsbook operators, the next 30 days will determine whether event contracts settle into a permanent parallel market or get folded back into state gaming law.

Sources

• Gambling Insider — AGA Escalates Prediction Market Pushback as Industry Divide Grows
• PYMNTS — CFTC Files Amicus Brief Defending Exclusive Jurisdiction Over Prediction Markets
• iGaming Today — Federal Judge Blocks Arizona From Enforcing Gambling Laws on Prediction Markets
• National Law Review — Federal Court Blocks Arizona From Enforcing Gambling Laws Against Prediction Markets
• Bettors Insider — Federal Judge Issues Permanent Injunction Blocking Arizona's Criminal Case Against Kalshi
• Deadspin — AGA Sees Prediction Markets as "Existential" Industry Threat
• SBC Americas — AGA tags prediction markets 'threat' in new industry outlook
• Yogonet — AGA report shows stronger gaming outlook despite prediction markets pressure
• Bettors Insider — AGA Q1 2026 Outlook: 81% See Prediction Markets as "Very Significant" Threat
• Bonus.com — Federal Judge Blocks Arizona Crackdown on Kalshi in CFTC Fight
• NY Attorney General — James Sues Coinbase and Gemini for Running Illegal Gambling Platforms
• Wikipedia — Kalshi (background)