Twelve Senate Democrats have asked their colleagues to write a sports and casino-style betting ban into the CLARITY Act, the crypto market-structure bill that is now the most likely vehicle for federal prediction markets rules this year. The letter landed on 17 July, four days before a House subcommittee grilled the same industry across the Capitol. Six days after that, the deadline the entire fight was organised around began to slip.
KEY FACTS AT A GLANCE
- What happened: 12 Senate Democrats wrote to the leaders of two committees on 17 July 2026 asking for prediction market guardrails in pending crypto legislation
- Who led it: Sen. Martin Heinrich (D-N.M.), joined by 11 Democratic colleagues
- The two asks: a savings clause protecting IGRA and tribal-state compacts, plus a ban on CFTC-registered entities listing sports or casino-style contracts
- Bills targeted: the CLARITY Act and the Digital Commodity Intermediaries Act
- Status: neither provision is in the current text of either bill, and neither has been reported in the merged Senate draft that emerged on 22 July
- The clock: Senate Majority Leader John Thune had pledged a floor vote before the 7 August recess — on 23 July he said he no longer expects the bill to pass before then
What the twelve senators actually asked for
The letter went to four people: Senate Banking chair Tim Scott and ranking member Elizabeth Warren, and Senate Agriculture chair John Boozman and ranking member Amy Klobuchar. Between them, those two committees control the text of both bills the senators are worried about.
Sen. Martin Heinrich of New Mexico led the effort. He was joined by Tina Smith, Maria Cantwell, Richard Blumenthal, Mark Kelly, Patty Murray, Tammy Baldwin, Alex Padilla, Jacky Rosen, Adam Schiff, Brian Schatz and Gary Peters. Rosen’s signature is worth noting on its own — Nevada is the one state whose licensed-casino tax base is directly exposed to the outcome.
The senators want two things added. The first is a savings clause stating explicitly that nothing in the legislation preempts tribal authority under the Indian Gaming Regulatory Act or existing tribal-state gaming compacts. The second is a prohibition barring CFTC-registered entities from listing contracts that resemble sports bets or casino-style gaming products.
“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.”
— Opening line of the 17 July letter
It matters that this is a letter and not filed amendment text. Nothing has been introduced, nothing has been scheduled for a vote, and neither provision appears in the current draft of either bill. What the senators did was stake out a position while the merged Senate draft was still being written behind closed doors — a draft that has since surfaced, with no sign of either provision in it.
Why a crypto bill became a gambling fight
The CLARITY Act is not a gambling bill. It is a digital asset market-structure bill that hands the CFTC expanded jurisdiction over crypto markets. The gambling industry’s problem is what that grant of authority does as a side effect.
Kalshi’s legal position has always been that sports event contracts are swaps under the Commodity Exchange Act, which places them under exclusive federal jurisdiction and puts them beyond the reach of state gambling law. In April the Third Circuit agreed, affirming a preliminary injunction that barred New Jersey from enforcing its gambling statutes against the exchange — a ruling we covered when the Third Circuit came down on Kalshi’s side.
That is the reasoning the senators are trying to head off. Their argument is that if Congress hands the CFTC even broader exclusive jurisdiction without carving out event contracts, it retroactively blesses the preemption theory the courts are still arguing about.
“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.”
— The 17 July letter
The word doing the work there is permanently. Court rulings can be appealed, and the Ninth Circuit is still sitting on Nevada’s case. A statute is much harder to unwind, which is why both sides are treating this bill as the decisive round rather than another skirmish in the federal-versus-state fight the White House has already weighed into.
The scale the senators are reacting to
The numbers explain the urgency. According to CoinDesk, citing Dune Analytics data, Kalshi traded roughly $31bn in notional volume in June 2026, with about 85% of that coming from sports contracts. Polymarket’s international exchange hit a record $10.8bn in the same month, its US-regulated venue did $3.5bn, and Rothera — the Robinhood and Susquehanna joint venture — debuted at $2bn.
For scale, CoinDesk reported that US legal sportsbooks were projected to handle between $2.8bn and $4.3bn across all 104 World Cup matches. Kalshi’s World Cup contracts alone traded $22.42bn over the same tournament. The two figures are not measured the same way — exchange volume counts both sides of every trade and every resale, while sportsbook handle counts each stake once — so this is not a like-for-like multiple. But even discounted heavily, the gap is why the gaming industry stopped treating prediction markets as a curiosity. The company overtook Polymarket as the largest prediction market by volume earlier this year and has not looked back.
Those contract prices are quoted in cents rather than moneyline, which is part of why the products have been able to argue they are not bets at all. If you want to see what a 62-cent contract looks like in familiar terms, our odds converter will translate it.
The second front: a House hearing four days later
On 21 July the House Agriculture Subcommittee on Commodity Markets, Digital Assets and Rural Development held a hearing titled “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets.” Both of the trade bodies behind the June coalition letter had a seat at the witness table.
| Witness | Role |
|---|---|
| David Z. Bean | Chairman, Indian Gaming Association (Puyallup Tribe) |
| Christopher Cylke | SVP Government Relations, American Gaming Association |
| Robert A. Schwartz | Partner, Morgan, Lewis & Bockius |
| Carl Kennedy | Partner, Katten Muchin Rosenman |
| Asaf Meir | Founder and CEO, Solidus Labs |
No Kalshi or Polymarket executive appeared. The AGA and the Indian Gaming Association used the hearing to put a number on the harm, telling lawmakers that prediction markets have cost states and tribes more than $1.2bn in gaming tax revenue since the platforms began listing sports contracts. That figure is the industry’s own estimate rather than an independent audit, and it has moved before — the AGA was citing roughly $1bn as recently as May. It is worth treating as an advocacy number.
The more revealing part of the hearing was what members chose to ask about. Rather than pressing for a ban, the questioning kept returning to whether the CFTC has the capacity to police these markets at all.
“Unfortunately, I have serious doubts as to whether the agency has the capability to police these markets. Last year, after this administration’s DOGE efforts, the agency saw its staff reduced by 20 percent.”
— Rep. Angie Craig, House Agriculture ranking member, 21 July 2026
Craig also noted that the CFTC currently has a single sitting commissioner, chairman Michael Selig, and that House Republicans’ FY27 agriculture appropriations bill cuts the agency’s budget by $10m. Her framing was that the regulator now nominally in charge of a market that traded tens of billions in June is doing it with a fifth fewer staff than it had a year ago.
The other ledger: tribal gaming’s record year
The timing of the senators’ letter was not accidental. Four days after it went out, the National Indian Gaming Commission announced that tribal gaming generated a record $46.2bn in gross gaming revenue in fiscal 2025, up 5.3% — about $2.3bn — on the prior year. The figure comes from audited statements covering 545 gaming operations run by 246 tribes across 29 states.
That is the revenue base the letter is defending. Tribal gaming money is not corporate profit in the ordinary sense; under IGRA it funds tribal government services, which is why the senators framed the issue in sovereignty terms rather than competitive ones.
“poses an existential threat to tribal sovereignty by undermining the revenue that tribes rely on for government services”
— The 17 July letter, on the growth of prediction markets
Sixteen New Mexico tribes and pueblos backed the letter, along with the Indian Gaming Association and the National Congress of American Indians. New Mexico is where this dispute has been sharpest: four tribes and pueblos sued Kalshi in May, and the state attorney general followed with a suit of his own in June. It is the same coalition logic that produced the 39-state amicus effort in the Ninth Circuit, only now aimed at Congress instead of the courts.
Will any of it make it into the bill?
The case runs both ways — and the week after the letter went out strengthened one side of it considerably.
THE CASE EITHER WAY
Against the senators
- All 12 signatories are Democrats — no Republican has joined
- A standalone ban bill, S.4160, has sat in Senate Agriculture untouched since March
- The House hearing focused on CFTC resourcing, not prohibition
- Adding a gambling fight to a crypto bill gives leadership a reason to say no
- The merged draft that surfaced on 22 July has not been reported to contain either provision
For the senators
- The bill needs 60 votes; Republicans hold 53 and no Democrat has publicly backed the current text
- Slipping past the recess buys months of further negotiation
- A savings clause is a far smaller ask than an outright ban
- The June coalition letter gives them 50+ organisations of cover
The standalone bill is instructive. S.4160, the Prediction Markets Are Gambling Act, was introduced on 23 March 2026 by Adam Schiff with John Curtis and Catherine Cortez Masto. Its text is blunt: no contract “relating to any sporting event or athletic competition” may be listed or cleared on a registered entity, and casino-style games are defined to cover slots, video poker, blackjack, roulette, craps, table games, bingo, lotteries and simulations of any of them. It has bipartisan sponsorship and it has gone nowhere in four months. That is the fate the senators are trying to avoid by attaching their asks to a bill that is actually moving. Whether it is still moving is now the open question.
On 22 July a merged Banking and Agriculture draft — the very text the senators wrote to influence — began circulating among crypto industry figures before Democratic offices had seen it. Reporting on it has centred almost entirely on the ethics section, which the draft makes temporary: the conflict-of-interest bar expires in 2029 and enforcement sits with the Justice Department. Sen. Angela Alsobrooks called that “an unserious offer.” No published account of the draft describes a savings clause for IGRA, or any restriction on sports and casino-style event contracts.
The next day the timetable went too. Thune, who had promised a floor vote before the recess, told reporters he no longer expected the bill to get through it.
“I don’t think we’ll be able to get them done. I would like to at least get Clarity started. We’ll see where the votes are.”
— Senate Majority Leader John Thune, 23 July 2026
The arithmetic behind that is unforgiving. Passage needs 60 votes. Republicans hold 53, of whom 51 are reported to be behind the bill, and no Democrat has publicly backed the current text — at least a dozen have rejected or sharply criticised it. Nine legislative days remained before the recess when Thune spoke. For the twelve senators, a bill that stalls is not a loss: every week the text stays open is another week their savings clause can be argued into it.
Traders had been pricing that uncertainty all month, and not in a straight line.
There is a neat circularity here. The exchanges whose sports business the senators want banned are also the venues where the odds on that ban are being priced. Polymarket’s contract on the bill becoming law this year peaked at 82% on 19 February, bottomed at a record-low 32% on 17 July as the Senate stalled, jumped 11 points to 43% on 21 July when reports of a White House ethics deal landed, and had drifted back to roughly 37% by 24 July. Kalshi’s separate market on whether a Senate floor vote happens before 8 August was priced near 67.8% on 21 July, before Thune spoke. These are exchange contract prices rather than audited figures, and they move constantly — but the shape of the month says what traders actually doubt. It is not whether the Senate takes the bill up. It is whether anything gets signed.
WHAT TO WATCH
The merged draft has already landed, and nothing reported in it touches event contracts — so the senators’ first opening has probably closed. What is left is the floor text. If the bill slips past the recess, as Thune’s remarks suggest it will, the twelve get another round: 60 votes means Democratic support has to be bought with something, and a savings clause for IGRA is among the cheaper things Republican drafters could pay with. The signal to watch for is the tribal language appearing as a filed amendment rather than a letter. If the bill reaches cloture still silent on sports contracts, prediction markets will have won the federal argument without anyone voting on it directly.
FAQs
No. As currently drafted the bill says nothing about sports or casino-style event contracts. Twelve Senate Democrats asked for prohibition language to be added, but nothing has been introduced as amendment text, and no published account of the merged Senate draft that surfaced on 22 July 2026 describes either of their requested provisions.
The Digital Asset Market Clarity Act is a crypto market-structure bill that would give the CFTC expanded jurisdiction over digital asset markets. It passed the House in July 2025 and cleared the Senate Banking Committee 15-9 on 14 May 2026. It is not a gambling bill, which is exactly why the gambling industry is worried about it.
Two provisions. First, a savings clause stating that nothing in the legislation preempts tribal authority under the Indian Gaming Regulatory Act or existing tribal-state gaming compacts. Second, a prohibition stopping CFTC-registered entities from listing contracts that resemble sports bets or casino-style gaming products.
Martin Heinrich of New Mexico led it, joined by Tina Smith, Maria Cantwell, Richard Blumenthal, Mark Kelly, Patty Murray, Tammy Baldwin, Alex Padilla, Jacky Rosen, Adam Schiff, Brian Schatz and Gary Peters. All twelve are Democrats; no Republican has signed on.
Not entirely, but it would remove their largest business. Sports contracts accounted for roughly 85% of Kalshi’s June 2026 volume according to CoinDesk. Both platforms would keep their political, economic and cultural markets, which are unaffected by the requested language.
Because a broader grant of exclusive CFTC jurisdiction could override tribal-state gaming compacts negotiated under IGRA. Tribal gaming generated a record $46.2bn in gross gaming revenue in fiscal 2025 according to the National Indian Gaming Commission, and that money funds tribal government services rather than shareholder returns.
Yes. S.4160, the Prediction Markets Are Gambling Act, was introduced on 23 March 2026 by Adam Schiff, John Curtis and Catherine Cortez Masto. It would bar registered entities from listing contracts on sporting events or casino-style games. It was referred to the Senate Agriculture Committee and has not moved since.
Probably not before the August recess. Majority Leader John Thune had pledged a floor vote before the 7 August break, but on 23 July 2026 he said he no longer expected the bill to pass in time, hoping only to begin floor consideration. Passage needs 60 votes; Republicans hold 53 and no Democrat has publicly backed the current text. The White House agreed to ethics language on 20 July, but Democrats objected that the merged draft makes that provision temporary and leaves enforcement to the Justice Department.
KEY TAKEAWAYS
- It is a letter, not an amendment — twelve Senate Democrats asked for two provisions on 17 July; neither is in the current text of the CLARITY Act or the DCIA
- The ask is narrower than a ban — a savings clause for IGRA and tribal-state compacts, plus a prohibition on CFTC-registered entities listing sports or casino-style contracts
- The fight is about preemption, not gambling policy — the senators want to stop Congress ratifying the CFTC-exclusive-jurisdiction theory the Third Circuit accepted in April
- Both sides brought numbers — the AGA and IGA put lost tax revenue above $1.2bn by their own estimate, while tribal gaming posted a record $46.2bn in FY2025 per the NIGC
- Partisanship is the obstacle — all twelve signatories are Democrats, and the bipartisan standalone ban bill has not moved since March
- The deadline slipped — Thune had promised a floor vote before the 7 August recess, then said on 23 July that he no longer expects the bill to pass in time, which hands the senators more negotiating room rather than less
Sources
- S.4160 — Prediction Markets Are Gambling Act, full text — U.S. Government Publishing Office
- Examining Customer Protections and Market Integrity in Sports Event Prediction Markets — hearing notice and witness list — House Committee on Agriculture
- Ranking Member Angie Craig opening statement at sports event contracts hearing — House Committee on Agriculture Democrats
- NIGC announces $46.2 billion in FY 2025 gross gaming revenues — National Indian Gaming Commission
- FY 2025 Annual Report: Building for the Future — National Indian Gaming Commission
- Heinrich leads colleagues in urging Senate committees to regulate prediction markets — Los Alamos Daily Post
- U.S. Sen. Heinrich joins New Mexico tribes in push to shield tribal gaming from prediction markets — Yogonet International
- AGA, Indian Gaming Association argue harm from sports betting prediction markets in testimony to Congress — CDC Gaming
- U.S. gaming industry groups urge Congress to ban sports-event contracts — Yogonet International
- Prediction markets just crushed traditional sportsbooks in a World Cup breakout — CoinDesk
- Clarity Act clears U.S. Senate committee, on its way to a final test in Congress — CoinDesk
- New Clarity Act emerges that’s a start on the final draft, makes ethics rule temporary — CoinDesk
- Clarity Act expected to miss its window before Congress’ summer break, leadership says — CoinDesk
- Polymarket traders cut Clarity Act passage odds to record low as Senate delay drags on — CoinDesk
- Clarity odds jump 11 points on Polymarket after reports Trump agreed to ethics deal — CoinDesk
- Indian gaming had another record year in FY25, per NIGC report — iGaming Business
- New Mexico tribes seek injunction to block Kalshi on tribal lands — Tribal Business News
- Federal appeals court: CFTC jurisdiction over sports event contracts likely exclusive — Holland & Knight
- Third Circuit affirms Kalshi’s preliminary injunction — Skadden, Arps, Slate, Meagher & Flom
