The American Gaming Association’s live revenue tracker crossed $1 billion in estimated state and tribal tax losses from prediction markets on 28 May 2026, as the trade group intensifies pressure on Congress and state legislatures to bring yes/no exchanges inside existing regulatory frameworks.
The AGA has maintained the tracker as part of its campaign against prediction market operators, which are federally regulated by the Commodities Futures Trading Commission and do not hold state gaming licences. That structure places them outside the state tax pools that iGaming and online sports betting generate for states and tribes.
Miller Makes the Case on CNBC
AGA CEO and President Bill Miller cited the milestone during an appearance on CNBC, positioning the revenue shortfall as a public services issue rather than a gaming industry complaint.
“Forty-one attorneys general — that’s from every political stripe that there is in this country. It’s not about the AGA or the gaming industry, it’s about states and tribes that are losing literally $1 billion in state and tribal revenue that would otherwise go to fund important community projects and pay taxes to these states.” — Bill Miller, CEO and President, American Gaming Association
The 41 attorneys general referenced by Miller had submitted comments to the CFTC acknowledging the agency’s broader economic role while arguing it should not serve as the effective regulator of what they characterise as national sportsbooks. Miller’s comments came two days after President Trump said it is essential that the CFTC maintain its regulatory oversight of prediction markets, a statement the industry interpreted as federal backing for the current framework against state-level intervention.
The Structural Tax Problem
The revenue gap is a direct consequence of how prediction markets are regulated. Online sports betting and iGaming taxes have become significant contributors to state budgets, with several jurisdictions raising rates over the past two years. Prediction markets operate under federal oversight without state licences, meaning they contribute nothing to those state pools.
The AGA frames this as more than a tax issue. It has stated publicly that prediction market platforms are offering illegal sports betting nationwide outside the state and tribal regulatory frameworks that protect consumers, arguing the exchanges bypass consumer protections, override voter decisions, and ignore state and tribal laws alongside their tax obligations.
Pew Research Center data adds weight to that characterisation. Sports derivatives accounted for 80% of total volume on Kalshi between July 2024 and April 2026, making the product difficult to distinguish from regulated sports wagering in practical terms.
States including Massachusetts and Nevada have pursued litigation against operators including Crypto.com, Kalshi and Polymarket. The Massachusetts Attorney General filed suit against Kalshi specifically over illegal sports betting allegations, while Robinhood has pursued acquisitions to accelerate its own prediction market presence as the sector attracts new entrants alongside regulatory scrutiny.
State Legislatures Draft Their Own Frameworks
With the CFTC maintaining its jurisdictional position and federal action unlikely near term, states are building their own tax regimes. Kentucky is considering a 17.25% levy on prediction market operators’ transaction fees. Iowa is evaluating legislation that would require $20 million permits, $100,000 in annual fees, and a 20% tax on adjusted revenue. Pennsylvania is developing a separate bill combining state licensing fees with revenue taxes on yes/no exchanges.
Minnesota has moved furthest, banning prediction markets outright. The CFTC is challenging that ban in court, arguing federal jurisdiction takes precedence, a ruling that, if successful, would constrain what states can achieve unilaterally.
Kalshi, which raised $300 million in 2025 and expanded to more than 140 countries, has the resources to contest restrictions across multiple fronts. Whether the $1 billion figure drives coordinated congressional intervention or simply accelerates the current patchwork of state measures will define the sector’s regulatory trajectory through the remainder of 2026.
Source: American Gaming Association
