AGA says prediction markets have cost states, tribes over $1 billion in tax revenue

The American Gaming Association estimates states have missed out on $1 billion in tax revenues due to the rise of prediction markets, according to the trade group's latest report. President and CEO Bill Miller also said the platforms are currently not being properly regulated at the federal level.

The dispute turns on whether sports-related event contracts should be treated as federally regulated swaps and derivatives or as sports betting products subject to state and tribal gaming rules.

Several states have sued platforms including Crypto.com, Kalshi and Polymarket, arguing that they are offering sports wagering outside local regulatory frameworks. The CFTC has responded by suing states it says are interfering with its authority. Minnesota has banned prediction markets outright, a move now facing a CFTC legal challenge.

President Donald Trump said in a Truth Social post on Tuesday that the CFTC’s jurisdiction over prediction markets should be maintained. The Office of Management and Budget is also reviewing a proposal for the CFTC to regulate prediction markets.

AGA President and CEO Bill Miller told CNBC’s “Squawk Box” on Thursday that 41 attorneys general had weighed in to say the CFTC has an important role in the economy but should not act as the regulator of national sportsbooks. He said the issue was not about the AGA or the gaming industry, but about revenue losses affecting states and tribes.

AGA President and CEO Bill Miller

“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.

Miller described prediction markets as “backdoor sports betting,” arguing that the platforms operate like sportsbooks without comparable state-level oversight. The AGA has also said prediction market platforms bypass voter decisions, consumer protections, state and tribal laws, licensing requirements and taxes.

Some states are exploring tax responses. Kentucky is considering a 17.25% levy on prediction market operators’ transaction fees. Iowa is evaluating $20 million permits, $100,000 annual fees and a 20% tax on adjusted revenue. Pennsylvania is considering licensing fees and revenue taxes for yes/no exchanges.

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— Coalition for Prediction Markets (@PredictAction) May 28, 2026

Prediction market firms reject the sports betting comparison, saying their products have economic utility, including contracts tied to macroeconomic events and politics. The Coalition for Prediction Markets, which represents platforms including Kalshi, Coinbase and Robinhood, questioned the AGA estimate on X, writing, “Sources not found.” 

Kalshi spokesperson Elisabeth Diana also challenged the AGA’s estimate, calling it “fake math from casinos” and arguing that prediction markets are “fairer, safer and less predatory than casinos.”