US Tribal Leaders Push for Prediction Market Crackdown via Clarity Act

A significant legal battle is unfolding in the United States as traditional tribal gaming operators and digital prediction platforms clash over the future of event-based betting. Tribal regulators, supported by a group of influential senators, are calling for an amendment to the US Clarity Act. Their objective is to ensure that prediction markets, which allow users to trade contracts on political or sporting outcomes, are legally defined as gambling. Currently, these platforms operate in a regulatory gray area overseen by the Commodity Futures Trading Commission (CFTC) rather than state gaming boards.

The scale of these markets has grown rapidly, causing alarm among traditional operators. In 2024, the platform Kalshi reported a staggering $535 million in trading volume for contracts related to the US presidential election. Tribal leaders argue that these activities directly infringe upon their exclusive gaming rights granted by state and federal law. Senator Adam Schiff of California has taken a lead role by co-authoring the Prediction Markets Are Gambling Act, which seeks to prohibit the CFTC from listing any event contract that functions like a sports bet or casino game.

Numbers and facts

The financial impact of this legislative push was felt immediately on Wall Street. DraftKings shares dropped below $21 on a Friday in March 2026, hitting a fresh 12-month low of $20.53. This represented a 12% decline within a single week. Flutter Entertainment, the parent company of FanDuel, also suffered, with its share price falling to $100 for the first time since 2022. Both companies have seen their market value decrease by more than 40% over the past year as regulatory uncertainty looms over new product categories.

Conversely, Kalshi CEO Tarek Mansour has publicly criticized the move, claiming it is a coordinated effort by the 'casino lobby' to protect existing monopolies. He argues that regulated prediction markets offer a superior product and that banning them will only drive consumers to offshore, unregulated sites. Meanwhile, Senators Todd Young and Elissa Slotkin introduced the Public Integrity in Financial Prediction Markets Act of 2026 to combat potential corruption. The bill proposes that government officials using nonpublic information to trade on these markets face fines of at least $500 or double the profit made from the transaction.

"Rather than enforce the law, the CFTC is greenlighting these markets and even promoting their growth. It’s time for Congress to step in and eliminate this backdoor which violates state consumer protections, intrudes upon tribal sovereignty and offers no public revenue." - Adam Schiff, US Senator (California)

Background

At the heart of the debate is the classification of 'event contracts.' Prediction markets maintain they are financial tools for hedging risk, similar to commodities or options. However, critics like David Rebuck, the former director of the New Jersey Division of Gaming Enforcement, view them as clear examples of gambling. Taxation is another point of contention. Licensed sportsbooks in states like Illinois face steep tax rates, which Circa Sports CEO Derek Stevens describes as 'illegal bookmaker preservation taxes' that benefit offshore sites. Prediction markets currently avoid these specific gambling taxes, creating what tribes see as an unfair playing field.

Why it matters for German players

For players in Germany, the regulatory environment is far more structured than the current situation in the US. The Interstate Treaty on Gambling 2021 (GlüStV 2021) provides a clear framework that leaves little room for unregulated prediction markets. While US lawmakers struggle with definitions, German players benefit from the GGL's strict oversight. This means that betting on non-sporting events like elections is generally not permitted under a German license, focusing the market on high-integrity sports wagering.

German residents must adhere to a cross-operator monthly deposit limit of 1,000 euros, managed via the LUGAS system. Furthermore, virtual slot games are restricted to a maximum bet of 1 euro per spin. These measures are designed to prevent gambling addiction and financial distress. Unlike the US, where a 'backdoor' via the CFTC is being debated, any gambling offering in Germany requires an explicit license from the GGL. Using offshore prediction markets remains illegal and leaves players without any legal recourse if funds are withheld.

What it means for GGL-licensed casinos

For GGL-licensed operators, the US turmoil highlights the value of operating within a stable legal environment. While companies like DraftKings face volatility due to regulatory shifts, German operators have a predictable set of rules to follow. The GGL continuously monitors the market to ensure that only approved bets are offered, protecting the integrity of the industry. This stability allows for long-term planning, even if the restrictions on stakes and deposits limit short-term revenue compared to the more open US markets.