A group of Senate Democrats is urging Congress to tighten federal oversight of prediction market platforms, warning that pending digital asset legislation could weaken tribal gaming protections and erode states’ authority over gambling as lawmakers across Washington pursue a wider crackdown on the fast-growing industry.
Sen. Martin Heinrich and 11 other Democratic senators have asked two key Senate committees to revise pending digital asset legislation before it advances, arguing that the bills could unintentionally expand prediction markets at the expense of long-standing tribal and state gaming systems.
Senate Democrats call for stronger guardrails on prediction markets
In a letter to the leaders of the Senate Banking, Housing, and Urban Affairs Committee and the Senate Agriculture, Nutrition, and Forestry Committee, the lawmakers said the Digital Asset Market Clarity Act (CLARITY Act) and the Digital Commodity Intermediaries Act (DCIA) would reduce oversight of decentralized finance betting platforms while allowing prediction markets to operate outside existing gambling frameworks.
They wrote, “We write with urgency regarding the continued lack of proper regulation over prediction markets and the resulting circumvention of state and Tribal gaming regulatory frameworks. The Digital Asset Market Clarity Act (CLARITY Act) and Digital Commodity Intermediaries Act (DCIA), as currently drafted, will only serve to exacerbate these issues by further removing regulatory accountability for decentralized finance (DeFi) betting protocols that deploy unvetted prediction and wagering markets, directly infringing on instances of Tribal gaming exclusivity and state police powers.”
The senators said prediction markets offering sports-related contracts and casino-style products threaten tribal gaming revenue, which supports healthcare, education, housing, public safety and other government services under the Indian Gaming Regulatory Act of 1988. They also noted that tribes expanded into legal sports betting after the Supreme Court’s 2018 Murphy v. NCAA decision.
According to the letter, some prediction market operators have relied on Commodity Futures Trading Commission oversight of derivatives markets to offer nationwide sports and event wagering while avoiding state licensing and tribal regulation. The senators warned that broader CFTC authority without new safeguards would strengthen that approach.
They wrote, “Any further Congressional grant of exclusive CFTC jurisdiction over digital asset markets without ample guardrails for prediction market contracts will reinforce the CFTC’s claimed exclusive authority over event contracts and permanently circumvent the hard-won regulatory and economic protections established under IGRA and states’ police powers.”
The group wants Congress to explicitly preserve the authority of the Indian Gaming Regulatory Act and tribal-state gaming compacts while banning CFTC-regulated entities from listing prediction contracts that function as sports bets or casino-style games. They also proposed limiting decentralized finance exemptions so they do not extend to derivatives markets.
The request comes as Congress increases scrutiny of prediction markets on several fronts. Earlier this year, the Senate unanimously approved an ethics rule immediately banning senators, Senate staff and Senate officers from trading on prediction markets over concerns that access to nonpublic information could create unfair advantages. Lawmakers described the move as part of a wider effort to strengthen public trust.
Congress has also introduced several bipartisan proposals targeting the industry. The BETS OFF Act would prohibit contracts tied to government actions, military operations and other events where insiders could influence or know outcomes in advance. Another bipartisan measure, the Prediction Markets Are Gambling Act, would ban federally regulated sports prediction contracts, with supporters arguing they are effectively sports betting that belongs under state and tribal oversight. In the House, the proposed PREDICT Act would prohibit members of Congress, senior executive branch officials and their families from trading on political prediction markets, reflecting growing concern over insider trading risks and the industry’s evolving regulatory landscape.
The letter was signed by Heinrich, Alex Padilla, Tina Smith, Maria Cantwell, Richard Blumenthal, Jacky Rosen, Mark Kelly, Patty Murray, Tammy Baldwin, Adam Schiff, Brian Schatz and Gary Peters. It also includes draft legislative language outlining the proposed changes to federal law.
Featured image: Canva
The post Senate Democrats push tighter prediction market rules to protect tribal gaming appeared first on ReadWrite.
Recent Comments