Clarity Act Deadline Puts Prediction Market Rules in Question

Senators are moving to change the Clarity Act so sports prediction markets remain under state and tribal gaming law, not federal commodities oversight. The proposal surfaced this week at a Senate Indian Affairs Committee roundtable.

Indian Gaming Association Vice Chairman Tehassi Hill told the committee that prediction markets tied to sports and casino events should not bypass existing gaming rules. State gaming laws and the Indian Gaming Regulatory Act should govern those contracts, he said, not federal commodities law.

Tribal groups worry that broader federal oversight would weaken local control over sports wagering. That authority has traditionally sat with states and tribes. Sen. Tina Smith of Minnesota said lawmakers could attach similar language to the Clarity Act or the Farm Bill, a vehicle Congress routinely uses for policy items outside agriculture. The fix, Smith said, should be simple: the Commodity Futures Trading Commission should not override tribal-state agreements.

CFTC Chair Michael Selig has said the agency holds exclusive jurisdiction over prediction markets. The CFTC has challenged state enforcement actions in court on that question. The Trump administration backs Selig. Officials have called federal oversight of prediction markets critically important.

States disagree. Attorneys general from 44 states asked the CFTC in June to withdraw its proposed rule, Rule 40.11, arguing the agency went beyond the authority Congress granted under the Commodity Exchange Act.