AGA Pushes Back Against CFTC in New York Case, Framing Prediction Markets as Sports Betting

The American Gaming Association (AGA) has stepped into one of the most closely watched regulatory battles in the financial and gaming sectors, filing an intervention in CFTC v. New York. At the heart of the dispute is whether prediction markets can operate as legitimate trading platforms or whether they are simply offering sports wagers under another name.

The AGA’s filing opposes the Commodity Futures Trading Commission’s (CFTC) request for a preliminary injunction. In sharp language, the trade group argues that the Commission’s position “obfuscates a simple truth: prediction markets offer sports betting.” The intervention highlights a growing tension between regulators, state governments, and new entrants like Kalshi that have sought to expand prediction markets into mainstream sports.

The Ninth Circuit’s Guidance

The AGA leans heavily on a recent Ninth Circuit decision, which rejected the idea that prediction markets could escape gambling classifications by labeling their contracts as swaps. The court observed that “the substance of the sports event contracts offered on prediction markets is sports gambling, regardless of whether they call them swaps.” That ruling has become a touchstone for opponents of prediction markets, reinforcing the view that these platforms are not financial innovations but unlicensed sportsbooks.

By citing the Ninth Circuit, the AGA signals that federal courts are increasingly skeptical of attempts to reframe sports wagers as financial instruments. The decision provides a legal foundation for states like New York to argue that prediction markets fall squarely within their gambling laws.

Kalshi’s Advertising Problem

The AGA’s filing also points to Kalshi’s own marketing as evidence that prediction markets are indistinguishable from sportsbooks. In advertisements circulated across social media, Kalshi promoted itself as “the first app for legal sports betting in all 50 states.” Other campaigns featured slogans such as “Bet on the NFL, legal in 50 states” and “Bet on who scores the first touchdown.”

While Kalshi’s court filings describe its products in sanitized terms like “event contracts” and “trading,” its public-facing promotions repeatedly use the language of sports betting. That duality has become a liability. Regulators and courts have seized on the advertisements to argue that Kalshi is not offering a novel financial product but simply competing with DraftKings, FanDuel, and other licensed sportsbooks without paying the same taxes or following the same rules.

The Tax Divide

One of the most striking points in the AGA’s intervention is the financial disparity between licensed sportsbooks and prediction markets. According to the filing, New York collected $1.32 billion in online sportsbook taxes last year. Prediction markets, by contrast, contributed nothing.

That imbalance underscores the stakes for state governments. Sports betting has become a major source of revenue, funding education, infrastructure, and public programs. Allowing prediction markets to operate outside the tax framework threatens to erode that revenue stream. The AGA argues that prediction markets are exploiting a loophole, presenting themselves as financial platforms while siphoning customers away from regulated sportsbooks.

Dustin Gouker’s Analysis

Industry analyst Dustin Gouker has chronicled the rise of prediction markets and their overlap with sports betting. His reporting, cited six times in the AGA’s filing, documents how platforms like Kalshi have adopted sportsbook-style pricing, offered proposition bets, and even experimented with parlay structures.

Gouker notes that Kalshi once used “American” pricing formats familiar to bettors, such as -106, before shifting to decimal-style displays. The company insisted that “nothing about the markets themselves has changed,” but the move highlighted how closely its offerings mirrored traditional betting. Gouker’s work has become central to the debate, providing data and examples that regulators and trade groups use to argue that prediction markets are simply sportsbooks in disguise.

Sportsbook Parallels

The similarities between prediction markets and sportsbooks are not theoretical. Side-by-side comparisons show nearly identical interfaces. A licensed sportsbook might list the Dallas Cowboys at -2.5 points with a moneyline of -134, while Kalshi offers the same spread and moneyline with slightly different odds. Both platforms allow bets on over/under totals, proposition bets such as the number of corner kicks in a soccer match, and parlays combining multiple outcomes.

These parallels make it difficult for regulators to accept the argument that prediction markets are financial products. To the average consumer, the experience is indistinguishable from placing a bet at a sportsbook.

The Broader Implications

The AGA’s intervention is not just about New York. It reflects a broader effort by the gaming industry to protect its turf against new entrants that blur the line between finance and gambling. Licensed sportsbooks have invested heavily in compliance, paid billions in taxes, and built partnerships with states. Prediction markets, by contrast, operate under a different regulatory framework, often outside state gambling laws.

If prediction markets were allowed to expand unchecked, they could undermine the regulated sports betting industry. The AGA’s filing suggests that the group sees this as an existential threat. By framing prediction markets as unlicensed sportsbooks, the AGA hopes to push regulators and courts to shut them down or force them into the same tax and compliance regimes as traditional operators.

What Comes Next

The case in New York will test whether prediction markets can survive in their current form. If the court sides with the AGA and the state, platforms like Kalshi may be forced to either obtain gambling licenses or exit the sports market entirely. If the CFTC prevails, prediction markets could gain a foothold as a new category of financial product, potentially reshaping both finance and gaming.

For now, the AGA’s intervention has shifted the momentum. By combining legal precedent, advertising evidence, and tax data, the trade group has presented a compelling case that prediction markets are not financial innovations but sports betting platforms operating outside the law.

In Summary

The battle over prediction markets is more than a regulatory skirmish. It is a clash between two visions of how Americans engage with risk and reward. On one side are licensed sportsbooks, heavily taxed and regulated, contributing billions to state coffers. On the other are prediction markets, sleek and modern, promising financial sophistication but delivering wagers that look and feel like bets on the Cowboys or the Jets.

The AGA’s intervention in CFTC v. New York crystallizes that conflict. By declaring that “prediction markets offer sports betting,” the trade group has drawn a line in the sand. The outcome of this case will determine not only the future of prediction markets but also the balance of power between finance and gaming in the United States.