Posted on: May 28, 2026, 01:37h.
Last updated on: May 28, 2026, 01:37h.
- Gaming lobby says states and tribes have missed out on more than $1 billion in tax revenue from prediction markets
- Prediction markets are federally regulated
- States are grappling with how to appropriately tax yes/no exchanges
States and Native American tribes are missing out on significant tax revenue from prediction markets because there aren’t adequate tax protocols in place.
The American Gaming Association (AGA), a vocal prediction market critic, says yes/no exchanges have sapped $1 billion from state and tribal coffers — revenue that otherwise could have been allocated to essential services, infrastructure and other local needs. As of this writing, the AGA’s live tracker puts the tally of lost revenue at just over $1 billion and it’s rising by the second.
We recently had 41 Attorney’s General from around the country weighing in saying the CFTC plays an important role in the nation’s economy, but they’re not the regulator of national sportsbooks,” said AGA CEO and President Bill Miller on CNBC this morning. “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.”
Miller’s comments and the AGA’s tally of lost revenue at the hands of prediction markets emerge just two days after President Trump said it’s essential the Commodities Futures Trading Commission (CFTC) maintain its regulatory oversight of prediction markets, implying states shouldn’t be standing in the way of that.
States Looking for Prediction Market Tax Solutions
iGaming and online sports betting taxes have been moneymakers for states, so much so that there’s been a spate of related increases over the past two years, but prediction market taxation isn’t as straightforward because those exchanges are federally regulated and they don’t hold state gaming licenses.
Those are among the reasons a slew of states are pursuing litigation against companies such as Crypto.com, Kalshi and Polymarket and why Minnesota outright banned prediction markets — a move that’s being legally challenged by the CFTC.
Some states are attempting to find prediction market tax solutions. For example, Kentucky is considering a bill that if signed into law, would apply 17.25% levy on prediction market operators’ transaction fees. Iowa is evaluating legislation calling for yes/no exchanges to pay for $20 million permits, subjecting those companies to $100,000 in yearly fees and a 20% tax on adjusted revenue.
Pennsylvania is considering its own prediction market tax regime. That state is considering a bill that would levy specific state licensing fees and revenue taxes on yes/no exchanges.
AGA Says Prediction Markets Offering Illegal Sports Betting
In taking legal action against prediction market firms, many states contend those companies are offering sports wagering outside of state regulatory guidelines. The AGA, which counts casino and sportsbook operators among its constituents, concurs.
“Prediction market platforms are offering illegal sports betting nationwide outside the state and tribal regulatory frameworks that protect consumers. They override voter decisions, bypass key consumer protections, ignore state and tribal laws, and avoid licensing and taxes,” according to the trade group.
Recent data from the Pew Research Center indicate from July 2024 through April 2026, sports derivatives accounted for 80% of the volume on Kalshi, the largest US prediction market operator.
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