Twelve Democratic Senators have sent a letter urging two critical Senate committees to prohibit "prediction contracts that resemble sports bets or casino-style gaming products" as part of the ongoing discussions on the CLARITY Act.
In correspondence dated July 17, they addressed the chairs and ranking members of both the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry. Their message emphasized the need to safeguard tribal gaming sovereignty and state enforcement rights in response to a contentious crypto bill, which has garnered opposition from tribal representatives, labor unions, and business chambers.
The Senators noted that current prediction markets exploit federal commodity and derivatives regulations to conduct nationwide sports and event wagering, disregarding existing state and tribal gaming licenses. The letter asserts, "These platforms claim to derive their operational authority from the Commodity Futures Trading Commission (CFTC), which has asserted its exclusive jurisdiction to oversee and regulate all prediction markets and continues to erroneously classify these products as financial swaps or derivatives rather than gambling.
They warn that any Congressional endorsement of the CFTC’s exclusive jurisdiction over digital assets, without adequate safeguards for prediction market contracts, would reinforce the CFTC's claims and undermine the regulatory protections established by the Indian Gaming Regulatory Act (IGRA) and state authorities.
As for the specifics of the proposed ban, the letter suggests draft amendments to the Commodity Exchange Act. In summary, the proposed changes would establish three key points:
(i) No agreement or contract relating to the outcome of any sporting event or casino-style game should be available for trading on registered entities.
(ii) The Act would not supersede the Indian Gaming Regulatory Act, the Unlawful Internet Gambling Enforcement Act of 2006, the Wire Act, or any relevant state or tribal laws.
(B) The Act would not infringe on federal, state, or tribal laws concerning gaming or gambling.
The Senators signing the letter are Tammy Baldwin (Illinois), Richard Blumenthal (Connecticut), Maria Cantwell (Washington), Martin Heinrich (New Mexico), Mark Kelly (Arizona), Patty Murray (Washington), Alex Padilla (California), Gary Peters (Michigan), Jacky Rosen (Nevada), Brian Schatz (Hawaii), Adam Schiff (California), and Tina Smith (Minnesota). They expressed urgency, stating, "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." They cautioned that the CLARITY Act and the Digital Commodity Intermediaries Act (DCIA), as they stand, would only worsen the regulatory vacuums affecting decentralized finance betting protocols, challenging tribal gaming rights and state regulatory powers.
As for the future of the CLARITY Act, which has the backing of Senator Cynthia Lummis (R-Wyoming), its fate in the Senate remains uncertain amid ongoing partisan tensions and ethical concerns surrounding perceived favoritism toward President Donald Trump's crypto investments, reportedly yielding over $1 billion in profits in 2025.
