World Lottery Association urges regulators to treat prediction markets as sports betting

Dig Deeper

The Backstory

A fast-growing market tests old regulatory lines

The World Lottery Association’s call for prediction markets to be treated like sports betting reflects a broader fight over whether sports-event contracts are financial products, gambling products or both. That distinction has become more than semantic as platforms offering contracts tied to game outcomes expand across jurisdictions where licensed sportsbooks, lotteries and tribal operators are subject to state or national rules on taxes, advertising, age checks, integrity monitoring and responsible gambling.

Prediction market operators have generally leaned on their status under commodities and derivatives law, arguing that event contracts fall within federal financial oversight rather than state gambling regimes. Critics in the lottery and gaming sectors say that position allows companies to offer sports wagering in practical terms without the obligations imposed on licensed betting operators. The WLA’s intervention adds international weight to a dispute that has already drawn in U.S. states, tribes, commercial casino interests and federal policymakers.

The stakes have grown with volume. The WLA’s estimate that monthly spend reached about $26 billion in January 2026 signals why lotteries and regulators are pressing for clarity. If these products continue to scale outside gambling frameworks, traditional operators say governments could lose tax revenue, consumer protections could be weakened and sports integrity systems could be fragmented.

States and tribes sharpen the revenue argument

In the U.S., the most forceful pushback has come from groups that operate under gambling compacts, state licenses or lottery authorizations. The American Gaming Association has framed prediction markets as a direct fiscal threat, saying states have already lost more than $1 billion in tax revenue because sports-event contracts are not taxed like legal sports betting. AGA President and CEO Bill Miller made that case in a CNBC appearance, arguing that the products function as “backdoor sports betting” while avoiding the rules that fund public services. The association’s warning, detailed in its claim that prediction markets have cost states more than $1 billion in tax revenue, helped shift the debate from legal classification to budget impact.

That argument resonates in states where sports betting is legal only through licensed operators and where tax rates, compliance checks and responsible gambling obligations were negotiated as part of broader market legalization. If prediction platforms can take sports-related positions nationwide under federal commodities oversight, state regulators say local licensing systems may be bypassed. The result, opponents argue, is a two-track market: one group of operators subject to gambling taxes and safeguards and another competing for similar customers under lighter or different supervision.

For lotteries, the issue is also institutional. Government-authorized lotteries are often tasked with raising money for public programs while operating within strict limits on product design, marketing and player protection. A parallel sector offering high-volume sports speculation without comparable rules could dilute revenue and undermine public confidence in regulated gaming.

Tribal sovereignty moves to the center

The dispute is especially sensitive in tribal gaming, where revenue supports government services and where market access is tied to sovereignty and negotiated compacts. Tribal leaders have argued that prediction platforms are not merely competitors but entities that can reach customers on tribal lands without tribal consent or geofencing restrictions. That concern has elevated the debate beyond consumer protection and tax policy into questions of jurisdiction.

The Indian Gaming Association recently took the issue to Capitol Hill, warning that sports-event contracts pose an urgent threat to tribal gaming and self-determination. At the briefing, tribal representatives said platforms regulated as financial exchanges are effectively offering sports bets while sidestepping the Indian Gaming Regulatory Act and state-tribal compacts. The association’s position, outlined in its warning that prediction markets pose an urgent threat to tribes, underscored how quickly the matter has moved into federal policy circles.

Similar concerns have surfaced at the state level. In New Mexico, the Mescalero Apache Tribe has urged lawmakers and the attorney general to act against online platforms it says violate tribal gaming agreements. Tribal officials said companies such as Kalshi use a regulatory “backdoor” by presenting sports wagers as commodity futures trading, even though online sports betting is illegal in the state. The tribe’s push for a crackdown on online sports betting in New Mexico shows how local compact disputes are becoming part of a national test of federal and state authority.

Regulators face cross-border pressure

The WLA’s paper lands at a time when gaming regulators are trying to keep pace with products that do not fit neatly into legacy categories. Prediction markets can be accessed online, operate across borders and draw on financial-market concepts, but their sports offerings may create the same risks regulators associate with betting: underage access, problem gambling, insider information, market manipulation and match-integrity concerns.

That challenge has increased the importance of international coordination. The International Association of Gaming Regulators recently appointed Kevin Mullally as its first chief executive, a move aimed at strengthening collaboration among regulators facing common problems across jurisdictions. Mullally, who previously led the United Arab Emirates’ General Commercial Gaming Regulatory Authority, is expected to help the group address rapidly evolving markets and cross-border regulatory complexity. His appointment as the first chief executive of the International Association of Gaming Regulators reflects the growing demand for shared regulatory models as online gaming products expand faster than national rulebooks.

The UAE’s experience also illustrates how new markets are trying to build regulated gambling structures from the start. The UAE Lottery, operated by The Game LLC and licensed by the General Commercial Gaming Regulatory Authority, has moved to join the WLA, gaining access to a network of government-authorized lotteries. Its planned entry into the association, described in the announcement that The UAE Lottery will join the World Lottery Association, places the country inside a global lottery framework that emphasizes authorization, oversight and responsible operations. That framework is the standard the WLA now argues should apply, at least in equivalent form, to prediction markets tied to sports.

The CFTC sits at the fault line

At the center of the U.S. conflict is the Commodity Futures Trading Commission, which oversees derivatives and has become the key federal authority for prediction market operators. Supporters of the sector say federal oversight is appropriate because event contracts are structured as swaps or derivatives. State regulators, tribal governments and gaming groups counter that a financial label should not override the substance of sports wagering.

This split has produced a growing patchwork of litigation, warning letters and legislative proposals. Some states have attempted to block or limit platforms they view as illegal sportsbooks. Nevada Rep. Dina Titus has introduced federal legislation aimed at preventing sports-event contracts offered through prediction platforms, reflecting the view that Congress may need to resolve the jurisdictional conflict. President Donald Trump’s public support for CFTC regulation of prediction markets has added another layer of political attention, but it has not settled the core question of whether financial regulation alone is enough when the underlying events are sports contests.

The WLA’s position narrows that question: Even if jurisdictions classify prediction markets as financial products, the association says comparable gambling safeguards should still apply. That approach would not necessarily require every country to use identical legal labels, but it would push regulators toward similar standards for consumer protection, advertising, age verification, harm prevention, suspicious activity reporting and sports-integrity cooperation.

Why the lottery sector is pressing now

The timing of the WLA’s intervention reflects concern that market structure could harden before regulators catch up. Once platforms build liquidity, acquire customers and normalize sports-event trading, it becomes harder for governments to impose gambling-style controls without disrupting existing users and business models. Licensed operators also fear that delayed enforcement gives prediction platforms a competitive head start while they remain bound by conventional gambling rules.

For lotteries, the risk is reputational as well as commercial. State and national lotteries typically operate under public-interest mandates and are expected to demonstrate strong controls. If consumers see little difference between a sports bet and a sports-event contract, gaps in oversight could damage confidence in regulated gaming more broadly. Sports leagues and integrity bodies may also face more complex monitoring challenges if activity migrates to venues outside established sportsbook reporting systems.

The WLA’s message is therefore both defensive and preemptive. It seeks to protect lottery revenue and regulatory authority, but it also reflects a wider concern that the convergence of finance, gaming and online entertainment is outpacing traditional oversight. The next phase will depend on whether regulators accept the industry’s argument that function should matter more than form. If they do, prediction markets tied to sports may face a future that looks far more like licensed betting, regardless of the contracts’ financial-market roots.