AGA Warns Prediction Markets Mirror Sweepstakes Casinos, Pose Threat to Regulated US Gaming

The American Gaming Association (AGA) is intensifying its campaign against prediction markets that offer contracts related to sports, asserting that these platforms are central to an expanding battle against unlawful betting across the United States. The AGA draws parallels between these markets and the previously curtailed sweepstakes casinos, advocating for similar regulatory scrutiny.

A fundamental point of contention for the AGA is the regulatory disparity: state-by-state licensing governs traditional gambling, while prediction markets operate nationwide under federal trading regulations. This framework, the association argues, both undermines established state gambling statutes and confers an unjust competitive edge to unlicensed operators over legal betting enterprises.

According to the AGA's "State of the States 2026 report," a comprehensive response to sports event contracts was already observed in 16 states during 2025. Actions varied from issuing cease-and-desist orders and filing lawsuits to official declarations that these products constitute unlicensed sports wagering.

The report categorizes prediction markets alongside other segments of the illegal gaming market, including offshore sportsbooks and certain skill games, notably referencing sweepstakes casinos. Last year saw significant legislative and enforcement efforts effectively push online sweepstakes casinos, which utilized virtual currencies and prize mechanisms to emulate online casino play, out of several key jurisdictions.

Bill Miller, President and CEO of the AGA, highlighted the group’s prior success in combating sweepstakes operators. He remarked, "We successfully stopped the advance of sweepstakes casinos and saw them pushed out of many key markets." In 2025, five states—California, Connecticut, Montana, New Jersey, and New York—enacted specific legislation to prohibit sweepstakes gaming platforms that mimic online casinos or sportsbooks. Additionally, Arizona and Louisiana enforced existing laws to curb these operations.

The AGA is now signaling a similar trajectory for prediction markets. Miller affirmed that the organization has "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."

Beyond just market share, the AGA contends that this dispute challenges the foundational principles of the American gaming framework. The integrity of consumer protections, adherence to responsible gaming standards, and the equitable distribution of tax revenues, it argues, are contingent on a clear, state-regulated system.

A significant financial aspect of this conflict, as identified by the AGA, is the diversion of public funds. The association estimates that sports event contracts have now resulted in over $1 billion in lost state and tribal revenues. Miller emphasized, "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." These funds, if legally channeled, would support vital public services such as education, infrastructure, public safety, and responsible gambling initiatives.