The American Gaming Association estimates that prediction market platforms have cost state governments more than $1 billion in foregone gaming tax revenue, with the bulk of that figure accumulating since the start of 2025.
Speaking on CNBC's "Squawk Box," Bill Miller, the association's president and CEO, tied the revenue shortfall directly to the taxes states collect from licensed gambling operators. "It's about states and tribes that are losing literally a billion dollars today in state and tribal revenue that would otherwise go to fund important community projects," Miller told CNBC. Miller also pointed to Native American tribal casinos as bearing a share of the financial impact.
According to CNBC, Miller labeled prediction markets "backdoor sports betting," contending that these platforms function like unregulated national sportsbooks that sidestep the gaming taxes paid by their licensed competitors. The platforms' self-description as financial investing tools rings hollow to Miller, who noted that sports-related event contracts drive the bulk of their trading volume.
The association's commercial gaming revenue tracker puts the figure at nearly $950 million in potential gaming taxes lost since the start of 2025 alone. Regulated gaming generated $4.67 billion in gaming tax revenue for states in the first quarter of 2026, an 11% increase over the prior year — a figure the association said would be higher but for operators of prediction market platforms, skill machines, and sweepstakes casino sites, none of which pay state gaming taxes.
The dispute over who has authority to regulate prediction markets has escalated into a legal and political battle. The Commodity Futures Trading Commission has sued Arizona, Connecticut, and Illinois to block those states from enforcing their gambling statutes against prediction market platforms, arguing Congress granted the agency exclusive authority over such contracts under the Commodity Exchange Act. President Donald Trump has said on social media that the CFTC's jurisdiction over prediction markets should be maintained.
A federal appeals court dealt a significant blow to state regulators when it ruled against New Jersey's attempt to restrict Kalshi, finding that contracts listed on a CFTC-licensed exchange fall exclusively under federal oversight. The ruling was the first of its kind from a federal appeals court, though the broader legal fight remains unresolved, with additional cases pending in other circuits.
Miller told CNBC that his organization accepts the CFTC's authority over commodities and financial instruments, but parts ways with the agency on a different question. "Where we differ strongly is the belief that the CFTC is enabling these prediction markets to operate national sportsbooks with very little to no regulatory oversight," he said.