[Senate Hearing 119-511]
[From the U.S. Government Publishing Office]
S. Hrg. 119-511
NO SURE BETS: PROTECTING SPORTS
INTEGRITY IN AMERICA
=======================================================================
HEARING
before the
SUBCOMMITTEE ON CONSUMER PROTECTION,
TECHNOLOGY, AND DATA PRIVACY
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
MAY 20, 2026
__________
Printed for the use of the Committee on Commerce, Science, and Transportation
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online: http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
64-426 PDF WASHINGTON : 2026
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
TED CRUZ, Texas, Chairman
JOHN THUNE, South Dakota MARIA CANTWELL, Washington,
ROGER WICKER, Mississippi Ranking
DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts
MARSHA BLACKBURN, Tennessee GARY PETERS, Michigan
TODD YOUNG, Indiana TAMMY BALDWIN, Wisconsin
TED BUDD, North Carolina TAMMY DUCKWORTH, Illinois
ERIC SCHMITT, Missouri JACKY ROSEN, Nevada
JOHN CURTIS, Utah BEN RAY LUJAN, New Mexico
BERNIE MORENO, Ohio JOHN HICKENLOOPER, Colorado
TIM SHEEHY, Montana JOHN FETTERMAN, Pennsylvania
SHELLEY MOORE CAPITO, West Virginia ANDY KIM, New Jersey
CYNTHIA LUMMIS, Wyoming LISA BLUNT ROCHESTER, Delaware
Brad Grantz, Republican Staff Director
Nicole Christus, Republican Deputy Staff Director
Lila Harper Helms, Staff Director
Melissa Porter, Deputy Staff Director
------
SUBCOMMITTEE ON CONSUMER PROTECTION,
TECHNOLOGY, AND DATA PRIVACY
MARSHA BLACKBURN, Tennessee, Chair JOHN HICKENLOOPER, Colorado,
JOHN THUNE, South Dakota Ranking
DEB FISCHER, Nebraska AMY KLOBUCHAR, Minnesota
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
TODD YOUNG, Indiana EDWARD MARKEY, Massachusetts
JOHN CURTIS, Utah TAMMY BALDWIN, Wisconsin
SHELLEY MOORE CAPITO, West Virginia BEN RAY LUJAN, New Mexico
CYNTHIA LUMMIS, Wyoming LISA BLUNT ROCHESTER, Delaware
C O N T E N T S
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Page
Hearing held on May 20, 2026..................................... 1
Statement of Senator Blackburn................................... 1
Prepared statement of Hon. Catherine Cortez Masto, U.S.
Senator from Nevada........................................ 4
Letter dated May 19, 2026 to Hon. Marsha Blackburn and Hon.
John Hickenlooper from the Southeastern Conference: Barry
Evans, University of Alabama; Romani Thurman, University of
Arkansas; Braden Augustus, Louisiana State University; and
Cade Phillips, Texas A&M University........................ 5
Statement of Senator Hickenlooper................................ 2
Statement of Senator Cruz........................................ 42
Statement of Senator Curtis...................................... 48
Statement of Senator Baldwin..................................... 50
Statement of Senator Schatz...................................... 52
Statement of Senator Cantwell.................................... 56
Statement of Senator Rosen....................................... 58
Statement of Senator Lujan....................................... 62
Witnesses
Bill Miller, President and Chief Executive Officer, American
Gaming Association............................................. 7
Prepared statement........................................... 8
Mary Beth Thomas, Executive Director, Tennessee Sports Wagering
Council........................................................ 13
Prepared statement........................................... 14
Scott Sadin, Co-Founder and Co-Chief Executive Officer, Integrity
Compliance 360................................................. 19
Prepared statement........................................... 20
Hon. Patrick McHenry, Senior Advisor, The Coalition for
Prediction Markets............................................. 24
Prepared statement........................................... 26
Dr. Harry Levant, Director of Gambling Policy, Public Health
Advocacy Institute............................................. 27
Prepared statement........................................... 29
Appendix
Derek Longmeier, President of the Board of Directors, National
Council on Problem Gambling, prepared statement................ 69
Letter dated March 5, 2026 to Hon. Michael Selig, Chairman,
Commodity Futures Trading Commission from Jack Reed, United
States Senator and John Hickenlooper, United States Senator.... 73
Letter dated May 18, 2026 to Hon. Michael Selig, Chairman,
Commodity Futures Trading Commission from John Hickenlooper,
United States Senator and Jack Reed, United States Senator..... 74
Response to written questions submitted to Bill Miller by:
Hon. Maria Cantwell.......................................... 76
Hon. Ben Ray Lujan........................................... 77
Response to written questions submitted to Scott Sadin by:
Hon. Amy Klobuchar........................................... 78
Hon. Ben Ray Lujan........................................... 79
Response to written questions submitted to Hon. Patrick McHenry
by:
Hon. Maria Cantwell.......................................... 79
Hon. Amy Klobuchar........................................... 80
Hon. Ben Ray Lujan........................................... 81
Hon. John Hickenlooper....................................... 82
NO SURE BETS: PROTECTING SPORTS
INTEGRITY IN AMERICA
----------
WEDNESDAY, MAY 20, 2026
U.S. Senate,
Subcommittee on Consumer Protection, Technology,
and Data Privacy,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10 a.m., in
room SR-253, Russell Senate Office Building, Hon. Marsha
Blackburn, Chair of the Subcommittee, presiding.
Present: Senators Blackburn [presiding], Cruz, Curtis,
Hickenlooper, Cantwell, Klobuchar, Schatz, Baldwin, Lujan,
Blunt Rochester, and Rosen.
OPENING STATEMENT OF HON. MARSHA BLACKBURN,
U.S. SENATOR FROM TENNESSEE
Senator Blackburn. Good morning. Welcome to everyone.
Senator Hickenlooper is close at hand, so we are going to go
ahead and begin so that we stay on time this morning. And I
want to welcome each of you for being here today, and thank
you.
This is a hearing that we have wanted to get to and it is
an important hearing. I've heard about this issue quite a bit
in Tennessee, whether it's Saturdays in Neyland Stadium, to
nights at the Bridgestone Arena watching the Predators.
Tennesseans--and I think I can include all Americans in this--
love their sports. They love cheering for their teams. Sports
bring our families together. They unite people. They teach
young people about teamwork, discipline, sacrifice, and fair
play.
And American sports are not just this Nation's pastime.
They're a global symbol of competition watched by hundreds of
millions of people around the globe. When Americans watch their
favorite sports team, they don't want to worry about the game
being rigged. They don't want to worry that their favorite
player missed a free throw to make an extra buck on the side.
Unfortunately, though, there have recently been some high-
profile examples of match-fixing at the NBA and MLB.
What this does is to challenge Americans' trust in the
integrity of sports. And this has all been inflamed by the
rapid explosion of legal sports betting across our entire
country. What was once limited to a handful of locations is now
available in almost every single corner of the country. It is
carried with you night and day. It is right there on your
mobile device. Americans can now place bets instantly during
games, on individual plays, on college athletes, and it is all
done with a single touch of the screen. And the introduction of
sports event contracts on prediction markets has exposed more
people to sports betting.
While prediction markets represent financial innovation
across many sectors, there are real concerns that they function
much like traditional sports betting without the enforcement of
State regulators and attorneys general. While sports betting is
often a source of entertainment for responsible adults, it does
have its risk.
Like I mentioned, we have seen scandals involving
professional athletes, referees, and suspicious betting
activity. College athletes are reporting harassment and threats
from angry bettors, and Americans, including young people, are
being inundated with advertisements on social media. Their
favorite influencers and sports figures are introducing minors
to betting. Our young men are in crisis, with over one-third of
boys between the ages of 11 and 17 admitting to gambling last
year. Sixty percent of those who have been gambling and have
seen this gambling content online said they had it surface
through their social media algorithms. It was served up to
them. They didn't search for it. This is not safe. It needs to
stop. And advertising to minors is disgusting.
As we look to protecting the integrity of American sports
and protecting the most vulnerable, like our young people and
those with addiction risk, it will take all of us working in
good faith, from State regulators like Ms. Thomas, who is with
us today, the integrity monitors, and the prediction markets
and online sportsbooks.
So we're going to dive into this hearing today. It is one
that we have worked to assemble. We have a great--we're very
grateful to our witnesses for joining us as we begin to build
our book of workaround this topic. And at this time, I turn to
the Ranking Member for his opening statement.
STATEMENT OF HON. JOHN HICKENLOOPER,
U.S. SENATOR FROM COLORADO
Senator Hickenlooper. Thank you, Madam Chair. It has been a
pleasure working with you on this issue and others. And looking
at the--as you describe it--the inappropriately regulated
betting markets, specifically and particularly the recent
explosion of prediction markets posts everyday.
I come at this from a different point of view, but I share
your frustration. I don't talk about this all the time, but my
father got sick when I was--when I was 5 years old and died
when I was 8. It was my mother's second husband who passed
away, so I was the youngest of 4 kids and I didn't do very well
in those early years. And I was vulnerable in elementary
school, but especially in middle school and high school where I
had real challenges and I wasn't equipped to handle them. I
wasn't ready. If I'd been faced with this landscape--I was
impulsive. I kind of was attracted like many people to gambling
and to chance. I believe there was a beam of light coming down
from heaven that was touching me.
We got to get this right. 24/7 access to online sports
betting has increased these risks to consumers in a manner that
I think far outweighs the traditional brick-and-mortar gambling
facilities. This is especially true in the prediction markets.
Sports betting makes up 40 percent of the trades on Palaris
Market and a staggering 90 percent on Kalshi. Online
sportsbooks like FanDuel and DraftKings have started their own
prediction markets to in some way bypass or negotiate State
laws.
Prediction markets have been in the headlines recently for
permitting government officials to have inside information to
place bets on events relating to the death of Iranian leader
Khamenei, abduction of President Maduro. These are clear risks
to our national security when there's inside information being
leaked out. This shouldn't be happening. We've introduced the
BETS OFF Act to ban wagering on government actions, on war,
terrorism, and assassinations by people with inside
information. Similar inside trading issues exist in sports
betting prediction markets.
Is there a bet on a specific player's actions? Are they
going to miss that foul shot? Is that somehow going to be a way
to make a quick $10 on a wager? That's nuts. That's nuts. The
very fact that we're betting on that, which is clearly a--
should be a random outside event, the fact that so many people,
especially young people, especially young men, are wagering on
this, there's got to be a real concern.
Prediction markets claim that their sports event contracts,
which pose the same risk to consumers as online sports betting,
they say that they're investments and not subject to State or
tribal gambling laws. The CFTC--you know, if they're not
subject to those laws, then they are--the regulator is the
Commodity Futures Trading Commission--but the CFTC has
literally no experience in regulating sports betting.
Even worse, CFTC has failed to use the authority it does
have to protect sports bettors from insider trading, market
manipulation, predatory advertising, and financial instability.
This workaround is merely a way for prediction markets to skirt
State consumer protection laws.
I think prediction markets fail to protect young people who
are particularly vulnerable to gambling addiction. We have a
lot of young men, especially, that are vulnerable to this, and
we're doing nothing. Gambling addiction is at the additional
risk of being a silent illness. Unlike alcohol and drug
addiction, the financial and psychological harms that come with
gambling addiction are hard to see. And gamblers unlikely,
rarely share when they've lost. But of course, when they've
won, they're telling all their friends. So there's that sense
that gets translated in our virulent social media that it's
great, that it's positive, it's going to be a good thing.
Many states, including my home state of Colorado, prohibit
sportsbooks from advertising to minors under 21, restrict
advertising to those who are already struggling with gambling
addiction. However, the CFTC does not currently apply the same
protections to prediction markets. One study found that between
2018 and 2023, the amount of money that people spent on
gambling--on sports gambling, rose while their net investments
fell nearly 14 percent. In other words, they don't have the
money to invest because they're spending it on gambling. That's
the inescapable reality of that.
To really bring this home, I'll share that back in the days
of my restaurant owner days, we had a bartender and a waiter--a
waitstaff member, and she and he fell in love. It was, for the
whole restaurant, a wonderful moment. They were going to get
married, and he decided he wanted a bigger down payment for the
house they were going to buy together with their--with their
monies being commingled. Sure enough, he lost everything. Their
relationship, their love, their marriage--their future marriage
was destroyed.
When you see that firsthand, how in an instant someone's
life can be damaged probably forever, you see the seriousness
of this. And that's one story that I saw personally. This has
been happening by the thousands, the hundreds of thousands. I
mean, I'm not saying--and I'm a supporter, it's a victimless
crime. I'm not sure we--I was not in favor of sending people to
prison for gambling, but to let the hounds of hell, the
incredible power of mass marketing and social media, to let
that untethered prey on our young people, I think is
unconscionable. I think it's irresponsible.
I yield back to the Chair.
Senator Blackburn. I thank the Ranking Member. I know that
Chairman Cruz and Ranking Member Cantwell had wanted to make
statements today, and we will insert them when they're able to
get here. I do have two letters to submit for the record and
will ask to do so. Senator Cortez Masto had a statement she
wanted to make for the record, and then the SEC, that is in
Southeast Conference, the best conference, by the way. Go Vols!
They have a letter they wanted to submit for the record.
[The information referred to follows:]
Prepared Statement of Hon. Catherine Cortez Masto,
U.S. Senator from Nevada
I want to thank Consumer Protection Subcommittee Chair Blackburn
for holding this hearing, as well as Subcommittee Ranking Member
Hickenlooper, Committee Chair Cruz, and Committee Ranking Member
Cantwell.
I also want to thank the hearing witnesses, especially Bill Miller,
who I had the pleasure of speaking to about this exact topic just a few
weeks ago in my hometown of Las Vegas.
In Nevada, we know how to do gaming. We're the gold standard of
regulated, well-run gaming. And that includes our sportsbooks.
When sports bettors operate within the legal system, the entire
state of Nevada benefits.
But as this hearing is intended to discuss, prediction markets that
are claiming to be federally regulated are threatening the gaming
industry, not just in Nevada but across the country.
These companies are trying to weasel their way around state and
tribal gaming regulations by calling ``gambling'' by different names.
Let's be clear: calling it ``prediction markets'' or ``events
contracts'' doesn't change what these gambling operations are--illegal.
They're offering their users illicit sports wagers that have
essentially no limits. They don't have the same minimum age
restrictions, so 18-year-olds who otherwise couldn't gamble in Nevada
can make an account on Kalshi or Crypto.com.
Unfortunately, the current administration's Commodity Futures
Trading Commission is refusing to enforce its own rule to prohibit
gambling in event contracts. In fact, the CFTC has been doing the
opposite and endorsing these illegal prediction markets. They currently
have an amicus brief in the Ninth Circuit backing crypto.com and Kalshi
in Nevada.
There's bipartisan consensus that this is wrong. That's why Senator
John Curtis of Utah and I have pushed the CFTC to follow its own rules
and ban sports gaming on CFTC-regulated exchanges.
Senator Curtis and I, along with Senator Adam Schif of California,
also have a bill, the Prediction Markets are Gambling Act, to prohibit
any CFTC-registered entities like Polymarket and Kalshi from listing
any event contract that resembles a sports bet or casino-style game.
And as we know, the Senate just unanimously passed a rule barring
Senators and their staff from betting on prediction markets. That's a
good start--we need to make sure no one in a position of power is using
insider information to gain an unfair advantage.
I'm grateful we have a bipartisan consensus on protecting legal,
regulated gaming--because standing up for our gaming industry and the
tens of thousands of workers it supports is a priority for me.
Lastly, I want to recognize Chair Cruz for working with me to pass
our FULL HOUSE Act, which would fix an erroneous change in the
Republican tax bill that capped the amount of wagering losses able to
be deducted at 90 percent, creating a tax on non-existent income.
I'm going to continue to work with my colleagues on both sides of
the aisle to stand up for the industry and consumers on this issue.
Southeastern Conference
Birmingham, AL, May 19, 2026
Hon. Marsha Blackburn,
Chair,
Subcommittee on Consumer Protection, Technology, and Data Privacy,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.
Hon. John Hickenlooper,
Ranking Member,
Subcommittee on Consumer Protection, Technology, and Data Privacy,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.
Dear Chair Blackburn and Ranking Member Hickenlooper,
On behalf of the Southeastern Conference Student-Athlete
Advisory Committee (SAAC), we urge you to pass legislation that
protects student-athletes like us, now and in the future, from
the growing use of proposition (``prop'') betting in college
athletics and the threat it poses to student-athletes.
In today's age of technology, fans of college athletics
have never been closer to student-athletes through social
media. This has created opportunities for student-athletes to
build their personal brands and increase their marketability,
contributing to the current era of Name, Image, and Likeness
(NIL). While these developments have created valuable
opportunities, they have also introduced new risks for student-
athletes.
With increased accessibility, some individuals are using
these platforms to express frustration directly toward student-
athletes. Harassment via social media has become a common
challenge for many. Student-athletes often receive negative
comments after competitions, as well as direct messages
containing criticism and even threats tied to their
performance. The level of harassment is further intensified
when gambling is involved.
Beyond social media, individuals are now using payment
platforms such as Cash App and Venmo to demand money from
student-athletes when bets do not succeed. This is largely
driven by prop betting, which focuses on individual and team
performances.
There is also growing concern about the integrity of
college athletics. When bets are tied to individual statistics
or specific plays, it can create pressure and suspicion
surrounding student-athletes' performances. Eliminating prop
bets would help safeguard the integrity of college sports and
reduce these external pressures.
Student-athlete welfare and the pursuit of the highest
level of collegiate competition are central priorities of the
SEC. However, the growing pressures associated with gambling
further endanger student-athletes' well-being. These pressures
can hinder performance and prevent student-athletes from being
fully present and developing to their fullest potential, not
only in academics and athletics, but also as young men and
women preparing to contribute meaningfully to society.
In light of the rising threats facing student-athletes, we
respectfully ask that you support national legislation to
protect both student-athletes and the integrity of college
sports. Specifically, we urge you to pass legislation that
would eliminate prop bets on student-athletes. Thank you for
your leadership and continued commitment to student-athlete
welfare. We would welcome the opportunity to discuss this issue
further or provide additional information. Please do not
hesitate to contact me directly at (229) 460-4400 or via e-mail
at beevans2@crimson.ua.edu.
Kind regards,
Barry Evans
Men's Track & Field
The University of Alabama
NCAA Student Athlete Advisory Committee Representative
Romani Thurman
Volleyball
The University of Arkansas
SEC Student Athlete Committee Chair
Braden Augustus
Football
Louisiana State University
SEC Student Athlete Committee Vice Chair
Cade Phillips
Men's Basketball
Texas A&M University
SEC Men's Basketball Representative
NCAA Men's Basketball Oversight Committee Representative
NCAA Student-Athlete Engagement Group Representative
cc: Greg Sankey, Southeastern Conference Commissioner
The Honorable Ted Cruz, Chairman, Committee on Commerce,
Science and
Transportation, United States Senate
The Honorable Maria Cantwell, Ranking Member, Committee on
Commerce, Science
and Transportation, United States Senate
Senator Balckburn. Our witnesses today. Our first witness
is Mr. Bill Miller, President and Chief Executive Officer of
the American Gaming Association. He's led the AGA for seven
years, and over that time, the organization has experienced
expansive growth of sports gambling in the U.S.
Our second witness is Mary Beth Thomas, who serves as the
Executive Director of the Tennessee Sports Wagering Council.
She is an experienced gaming regulator and lawyer who works
closely with other State regulators to strengthen consumer
protections on legal gambling. She is also a native
Nashvillian, and I have known her since she was 3 years old.
She is really a great regulator.
Our third witness is Mr. Scott Sadin. He is the Co-founder
and Chief Executive Officer at Integrity Compliance 360, with a
background in financial market compliance. He created one of
the leading sports integrity monitoring firms in the United
States. And I thank you for your time yesterday.
Our fourth witness is my good friend, former Congressman
Patrick McHenry, who I think was the best Chief Deputy Whip
that the House ever had, because I was one of those Deputy
Whips. He is currently serving as the Senior Advisor for the
Coalition for Prediction Markets. During his 20 years in the
House of Representatives, Congressman McHenry served on the
House Financial Services Committee for many years, including as
Chairman, and we welcome him back to Capitol Hill.
Our final witness today, Dr. Harry Levant. Dr. Levant is an
internationally certified gambling counselor and currently
serves as Director of Gambling Policy at the Public Health
Advocacy Institute. He is also a recovering gambling addict
himself and advocates for policies he believes will help more
addicts recover and avoid relapsing.
I want to welcome each of you. At this point, we will begin
your time for testimony. Each of you will have five minutes,
and then we will begin our rounds of questioning. Mr. Miller,
you're recognized for five minutes.
STATEMENT OF BILL MILLER, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMERICAN GAMING ASSOCIATION
Mr. Miller. Thank you, Madam Chairman. Chairman Blackburn,
Cruz, Ranking Members Hickenlooper and Cantwell, members of the
Subcommittee, thank you for the opportunity to be here today on
behalf of the legal, State, and tribal regulated gaming
industry, one of the most highly regulated industries in the
United States. We are an essential part of the American
economy.
The legal gaming industry supports 1.8 million American
jobs. We have more than 1,000 casinos, tribal and commercial,
across 42 states, suppliers, manufacturers, and sports betting.
Our industry has created economic vitality in areas left behind
by other industries. We generate more than $100 billion in
employee wages. We deliver $18 billion annually in State and
local taxes to fund critically important community projects
like education, infrastructure, and public service.
The legal gaming industry, our regulators, and sports
leagues are aligned on our shared mission to protect sports
integrity. Together, the industry monitors, flags, and reports
suspicious activities and threats to that integrity. Since
PASPA was reversed in 2018, 40 states and the District of
Columbia have thoroughly worked to build sports betting
frameworks centered around integrity, consumer protection,
responsible gaming, and accountability. Other states like Utah,
Texas, and Georgia have chosen not to legalize sports betting,
yet there continues to be a robust offshore illegal market that
provides consumers no protections while receiving about $700
billion in American bets. And now gaming integrity frameworks
are being undermined by so-called prediction markets who are
evading State, local, and tribal authorities.
The legal State and tribal regulated gaming market has
proven safeguards. More than 8,400 State and tribal regulators
who oversee our industry. Licensed sportsbooks operate under
strict rules regarding age verification, AML compliance,
geolocation, integrity monitoring, responsible gaming,
advertising standards, and flagging suspicious activity.
Prediction markets, they don't comply with most of these
important regulatory protections, and they allow 18-year-old
teenagers to bet on sports.
And although a vast majority of their business is in the
sports base, prediction markets have also drawn attention for
offering death markets and other odious bets that threaten our
national security. We market ourselves accurately. We're part
of the entertainment economy. These so-called prediction
markets are deceptively calling sports betting financial
contracts and investing.
Despite messaging designed to beguile policymakers and the
public, they are increasingly being exposed as backdoor sports
betting operations. We know it, they know it, and the American
people know it. As Senator Hickenlooper said, nearly 90 percent
of Kalshi's wagers revolve around sports betting. They
advertise it themselves: sports betting legal in all 50 states.
A bipartisan coalition of 41 State attorneys general agree:
so-called sports events contracts are actually sports betting,
and the states must regulate them. We believe that prediction
markets are evading State and tribal authorities, and it has
cost those states and tribal authorities close to $1 billion in
lost tax revenue that would otherwise go to social services.
In closing, so-called prediction market platforms
jeopardize the integrity of sports. States, tribes, regulators,
leagues, and operators are working together to improve consumer
protections to reinforce responsible gaming. Our process
protects the integrity of sports. Why the prediction markets
don't want to play by these rules, it's for them to explain.
The CFTC was created to regulate markets critical to the
functioning of the Nation's economy, not to regulate Monday
Night Football. In 2024, Kalshi stated this in Federal court.
As the legislative history directly confirms, Congress did not
want sports betting to be conducted on derivative markets. And
just a few months later, they were offering an overwhelming
menu of sports bets from the NFL playoffs to the Super Bowl to
March Madness. Prediction markets, aided by a rogue CFTC, are
making a mockery of congressional intent. The prediction
markets are running national sportsbooks, and it's time to hold
them accountable in the same way we are.
Thank you for having us here today and look forward to our
conversation.
[The prepared statement of Mr. Miller follows:]
Prepared Statement of Bill Miller, President and CEO,
American Gaming Association
Chairman Blackburn, Ranking Member Hickenlooper, and Members of the
Subcommittee:
Thank you for the opportunity to testify today on behalf of the
American Gaming Association (AGA). As the national trade association
representing the legal, state-and tribal-regulated gaming industry, our
members include commercial and tribal gaming operators, suppliers, and
stakeholders committed to maintaining safe, transparent, and
responsible gaming environments across the United States.
The legal gaming industry supports 1.8 million jobs nationwide--
more than the populations of Denver and Nashville combined. The
industry directly employs more than 700,000 Americans and generates
$104 billion in wages.
Since the Supreme Court overturned the Professional and Amateur
Sports Protection Act (PASPA) in 2018, states and tribal governments
have thoughtfully built legal sports betting frameworks grounded in
consumer protection, integrity monitoring, robust geolocation
compliance controls, responsible gaming, and regulatory accountability.
Today, the $329 billion legal gaming industry exists because states and
tribal governments made intentional policy decisions on whether and how
to legalize and regulate this activity within their jurisdictions.
While the state-and tribal-regulated framework has long been
challenged by competition from illegal and unregulated forms of
gambling--both offshore and domestic--it is now also being severely
eroded by prediction market platforms offering sports event contracts
nationwide under the ``authority'' of the Commodity Futures Trading
Commission (CFTC).
These products function as sports betting in every meaningful
sense. Consumers are betting money on the outcome of sporting events
and player performances. Sports betting is being repackaged as a
financial product bypassing the consumer protections, responsible
gaming standards, and the state and tribal regulatory systems
established after PASPA.
In 2024, sports-related activity on Kalshi represented just
$227,000 in volume. Today, sports betting accounts for approximately 86
percent of their business, and has already generated more than $47
billion in trading volume this year alone. At the same time, crypto,
traditional financial, agriculture, and economic contracts--the types
of markets the CFTC was actually created to oversee--have collapsed
from more than 93 percent of their volume in 2023 to less than 1
percent today.
Even the companies offering these products have marketed them as
sports betting. Kalshi launched its national marketing campaign last
year boasting ``sports betting legal in all 50 states'' through its
platform. The public agrees, with recent polling finding that 81
percent of Americans say betting on sports through prediction markets
is gambling. Forty-one bipartisan state attorneys general from across
the country have challenged sports event contracts, and Nevada Gaming
Control Board Chairman Mike Dreitzer recently said it best: ``make
whatever word salad they want, but it's gambling.''
The Right Regulatory Framework
Following the repeal of PASPA, 39 states plus DC have taken a
deliberate and thoughtful approach to building sports betting
frameworks centered on consumer protection, integrity, accountability,
and law enforcement cooperation.
Legislatures, regulators, law enforcement, tribes, leagues, public
health experts, and operators spent years building systems designed to
balance consumer demand with strong protections and accountability.
Today, more than 8,400 state and tribal gaming regulators across the
country oversee legal gaming operations and enforce those standards
every day.
Over the last eight years, states have established rigorous
regulatory systems governing virtually every aspect of legal sports
betting, including:
Licensing, suitability reviews, and reporting requirements,
age and identity verification,
anti-money laundering compliance,
geolocation requirements,
integrity monitoring and suspicious activity reporting,
responsible gaming protections,
advertising and marketing standards, and
ongoing regulatory oversight and enforcement.
Importantly, not every state has chosen to legalize sports betting.
Some have made the intentional decision not to offer it at all, while
others have adopted in-person wagers only, limits on types of bets,
strict advertising standards, and other decisions they believe are
right for their jurisdictions. That is exactly how the system is
designed to function. States should retain the right to determine for
themselves whether sports betting is permitted within their borders
and, if so, under what terms, protections, and regulatory safeguards.
The legal market has generated meaningful economic benefits for
states and local communities. Since PASPA's repeal, legal sports
betting has generated more than $12 billion in state tax revenue
supporting critical priorities like education, infrastructure, economic
development, and responsible gaming programs. Those revenues are the
direct result of legal operators participating in transparent,
regulated systems subject to state oversight and taxation.
Furthermore, the current sports betting framework supports tribal
sovereignty under the Indian Gaming Regulatory Act. For decades, tribal
governments have negotiated compacts and built gaming frameworks
designed to reflect the priorities and needs of their own communities.
Those systems are intentionally structured to protect their people,
preserve regulatory authority, and ensure gaming revenues support
essential tribal government services, economic development, healthcare,
education, and long-term self-determination.
For many tribal governments, gaming revenue is a critical source of
funding. In 2025, tribal gaming operations provided more than $16
billion to support tribal governmental programs and investments,
helping address gaps in Federal funding for Indian programs.
That framework is now being undermined by prediction market
platforms attempting to use Federal commodities law to offer what are
functionally sports bets across all 50 states, including in
jurisdictions that expressly chose not to legalize sports betting.
These platforms are also bypassing the taxes and regulatory obligations
legal sports betting operators abide by, potentially depriving states
of an estimated $1 billion of sports betting tax revenue.
Congress never intended for Federal financial market regulation to
override Federal and state law, tribal sovereignty, or the carefully
constructed gaming frameworks built over decades. Those state-specific
frameworks also ensure compliance with the Wire Act prohibition on
interstate sports wagering. Prediction market operators are doing the
complete opposite: offering interstate sports wagering under the guise
of a futures trade.
The success of the legal market should be measured by the consumer
protections, integrity safeguards, responsible gaming investments, and
transparency that now exist--protections that were absent in the
illegal market prior to PASPA's repeal and that don't exist in the
commodities markets today.
Responsible Gaming is Central
The legal state-and tribal-regulated gaming industry understands
that with legalization comes responsibility.
Responsible gaming is foundational to maintaining consumer trust
and the long-term sustainability of sports betting in the United
States. Legal sportsbooks operate under extensive responsible gaming
requirements established by state regulators and reinforced by industry
standards. These protections include self-exclusion programs, deposit
and time limits, employee training, age and identity verification,
responsible gaming messaging, and ongoing monitoring designed to
identify potentially problematic behavior.
The gaming industry also invests more than $500 million annually
into responsible gaming programs, consumer education, research,
employee training. More than $123 million of state gaming tax revenue
is devoted to state problem gambling intervention and treatment
programs.
In addition, the AGA's Responsible Marketing Code for Sports
Wagering establishes standards around advertising content, target
audiences, and promotional activity. In 2023, the industry strengthened
those standards further by prohibiting sportsbook partnerships with
colleges and universities that promote sports wagering activity and
banning NIL agreements with amateur and college athletes.
These are concrete standards adopted by a regulated industry that
recognizes the unique responsibilities associated with offering legal
sports betting.
In 2025, the AGA launched Play Smart from the Start, a research-
backed responsible gaming initiative designed to make responsible
gaming messages relevant to all players and remind them that gambling
is entertainment. The campaign is promoted by legal operators, sports
leagues, and industry partners nationwide to encourage informed play
and reinforce the industry's commitment to responsibility.
Prediction market platforms operate outside many of these same
safeguards. Most states require customers to be at least 21 years old.
Prediction market platforms permit participation by 18-year-olds
nationwide while offering products that are functionally
indistinguishable from sports betting. Recent polling found that 81
percent of Americans view sports betting on prediction markets as
gambling, while 77 percent expressed concern that allowing 18-year-olds
to bet on sports through prediction markets could increase gambling-
related harm among young adults, compared with sportsbooks that require
users to be 21.
These platforms are aggressively marketing sports event contracts
using language that blurs the line between investing and gambling--
promoting concepts like ``building generational wealth,'' ``paying
rent,'' or ``sports betting legal in all 50 states.''
Legal sports betting advertising volume has decreased 27 percent
across all channels since its peak in 2021, while prediction market
sports advertising has exploded in the early months of 2026. Nearly
half of all digital sports betting ads impressions now come from
prediction markets--none of which include responsible gaming messaging
required of legal operators.
These findings reinforce the predatory nature, consumer confusion,
and underlying risks associated with what they call ``sports event
contracts.''
Integrity and Consumer Protection Depend on the Legal Market
Protecting the integrity of sports is fundamental to the success of
the legal gaming industry. Legal sportsbooks actively monitor betting
activity, share information with regulators and leagues, and utilize
sophisticated analytics to identify suspicious wagering patterns and
potential misconduct. Those safeguards exist because integrity threats
are taken seriously throughout the regulated market.
Legal sports betting gives consumers clear recourse. If something
goes wrong, state and tribal gaming regulators can investigate
complaints, enforce rules, and hold licensed operators accountable.
Prediction markets blur that accountability. Seventy-eight percent of
sports event contract bettors incorrectly believe state gaming
regulators can help resolve disputes involving these products--when in
reality, consumers have nowhere to go. If a prediction market bettor
has a concern, there is no comparable state regulatory structure to
turn to.
Recent investigations involving athletes, coaches, and suspicious
betting activity are concerning and should worry everyone in the room.
But they also demonstrate why the legal market not only matters, but is
working. In these high-profile cases, suspicious activity was
identified because regulated operators were monitoring the market,
flagging irregular wagering patterns, and coordinating with leagues,
regulators, and law enforcement. The activity occurred within
transparent and accountable regulatory frameworks.
The contrast with illegal and unregulated markets is stark. Illegal
and offshore sportsbooks continue to pose serious risks to consumers
and competition integrity. Operating entirely outside of U.S. law,
these companies evade taxes, ignore responsible gaming requirements,
and provide no consumer protections. Americans currently wager nearly
$700 billion annually with illegal and unregulated operators, and some
analysts estimate prediction markets alone could ultimately approach $1
trillion in annual trading volume.
The case involving Shohei Ohtani's former interpreter illustrates
exactly what happens when gambling activity takes place outside
regulated systems. Thousands of wagers were placed over an extended
period through an illegal bookmaker because there were no meaningful
safeguards, reporting obligations, or oversight mechanisms in place.
Competition integrity is foundational to the legal gaming market's
existence. Consumers will only participate in sports betting if they
trust the games themselves are fair. That is why legal operators invest
heavily in integrity monitoring systems, compliance programs, anti-
money laundering controls, and partnerships with leagues and
independent integrity monitors.
Prediction market platforms pose many of the same integrity risks
associated with sports betting while operating outside the regulatory
frameworks specifically designed to identify suspicious activity,
protect consumers, and preserve confidence in competition. We have
already seen the serious risk in other markets: a U.S. soldier charged
with using classified information to profit from prediction market bets
tied to the operation targeting Nicolas Maduro, and suspiciously timed
trades linked to the Iran conflict and military action markets. Given
that more than 90 percent of the volume is sports, a match fixing case
on prediction markets is just a matter of time. The CFTC is allowing
operators to self-certify and police themselves through rushed,
voluntary guardrails that do not come close to the state-and tribal-
regulated framework built for sports betting.
Don't just take it from me, earlier this year CFTC Chairman Michael
Selig stated: ``The CFTC is not a merit-based regulator--we do not
decide what people should be able to trade. Nor are we going to
regulate through enforcement.''
Conclusion
The legal state-and-tribal regulated sports betting market has
created robust consumer protections, rigorous responsible gaming
safeguards, strong integrity oversight, and real regulatory
accountability--and states, tribes, regulators, operators, leagues, and
law enforcement continue to work together every day to strengthen those
systems and address emerging challenges responsibly.
Congress can help further strengthen this system by considering the
following actions:
Reaffirming the longstanding principle that sports wagering
is subject to state and tribal gaming law. Recent bipartisan
legislation introduced by Senators Schiff and Curtis--the
Prediction Markets Are Gambling Act--to prohibit sports event
contracts reinforces that principle and would help prevent the
continued illegal expansion of sports betting through Federal
financial markets.
Working with the Administration to ensure the Department of
Justice and other Federal agencies prioritize enforcement
against illegal and offshore operators attempting to evade U.S.
law while avoiding consumer protections and regulatory
safeguards legal markets provide.
Revisiting outdated policies like the Federal excise tax on
legal sports wagering, which continues to disadvantage
regulated operators competing against illegal and untaxed
markets.
Strengthening Federal penalties for match-fixing as an added
deterrent to protect the integrity of sports.
Sports betting must occur within the transparent, accountable
state-and tribal-regulated systems specifically designed to oversee it
responsibly. Backdoor betting operations undermine the work and
expertise of 8,400 industry regulators, consumer protections embedded
in state and tribal law, and the will of voters across the country.
Thank you again for the opportunity to testify today. I look
forward to your questions.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Blackburn. Ms. Thomas. You're recognized for five
minutes.
STATEMENT OF MARY BETH THOMAS, EXECUTIVE DIRECTOR, TENNESSEE
SPORTS WAGERING COUNCIL
Ms. Thomas. Chairman Blackburn, Ranking Member
Hickenlooper, and members of the Subcommittee, it is an honor
to be here today, especially in front of my U.S. Senator. Thank
you for the opportunity to speak on the Tennessee Sports Gaming
Act and the priorities in place that we have to protect
consumers and to regulate previously unlicensed sports wagering
activity through formal oversight.
In Tennessee, it is a taxable privilege to offer sports
wagering pursuant to a license issued by our council. Since
sports betting went live in 2020, Tennessee has collected close
to $450 million in privilege taxes from licensed sportsbooks,
with 5 percent of that, or close to $23 million, dedicated to
problem gambling prevention and treatment.
Tennessee recognizes that gambling is risky and can become
problematic for some players if the right procedures are not
enforced. To that end, our law prohibits individuals under the
age of 21 from wagering. It requires sportsbooks to make
available and enforce exclusionary measures for those who do
not wish to access gaming platforms or receive marketing
materials.
In support of this requirement, our State agency manages a
statewide self-exclusion program to ensure communication of
these exclusions across every licensed sportsbook in our state,
no matter where the exclusion originated. Our law prohibits
credit card deposits and the extension of credit and requires
sportsbooks to provide the ability for players to set limits on
time and money deposited. After all, sports betting in
Tennessee is viewed as a form of entertainment for adults, not
a way for college kids to pay the rent.
Importantly, our law respects the concerns of teams,
schools, leagues, and players about particularly risky wagering
markets by prohibiting individual college player prop bets,
live team prop bets for any college sport, and any types of
wagers on injuries or penalties. Our law also allows teams,
leagues, and schools to prohibit other types of wagering
markets that may--excuse me, to ask the council to prohibit
other types of wagering markets that may be contrary to the
public interest or that could impact the integrity of a
particular sport.
Sportsbooks are required, and they do cooperate with
investigations by our office, sports governing bodies, and law
enforcement. And also importantly, our agency is empowered
under our law to investigate and fine unlicensed sportsbooks
who choose to operate in our state unregulated. Our council has
promulgated extensive rules to further support our statute's
consumer protections, which we have strengthened over time as
technology has advanced.
Those include strong know-your-customer regulations, to
identify players and prevent access by minors and other
prohibited players; secondary identity verification
requirements to prevent identity theft and proxy betting;
multi-factor authentication requirements to prevent bad actors
from taking over accounts; robust geolocation checks at
multiple points in time and access; and required account
suspension and reporting related to minors and prohibited
players.
A sportsbook's internal controls, which we approve and
regularly audit, must have procedures to immediately notify our
office of unusual or suspicious wagering activity. And this
reporting obligation goes far beyond money laundering or fraud.
It includes anything that could indicate match fixing, event
manipulation, or the misuse of inside information.
In many ways, our sportsbooks do act as the first line of
defense, but you cannot describe their reporting as self-
certification. As State regulators, we proactively identify and
work to correct gaps in sportsbook compliance with multiple
checks during the term of their licensure. We review all
material technological and operational changes, as well as all
changes to house rules and terms and conditions prior to
implementation. We require our sportsbooks to undergo annual
third-party operational and security assessments that are
reported directly to us for review.
Sportsbooks are also required to perform their own internal
audit and report findings and remedial measures to us. We audit
compliance with financial requirements and player-facing
technical components, as well as wagering catalogs to see
whether impermissible markets are being offered. We review
incident reports related to operational issues, which helps us
not only ensure compliance but helps keep us up to date on
issues that we might hear from a player, because we also serve
as the resource for the resolution of all player complaints in
Tennessee.
Although it may seem like there has been a growth of cases
regarding athlete manipulation or information sharing, my
experience has been that legal and regulated sports betting has
greatly increased the volume of data available, which has led
to a higher number of incidents being reported and addressed.
Any criminal behavior can be difficult to completely prevent,
but it can often be detected, investigated, and enforced with
the right tools and collaboration.
Thank you very much.
[The prepared statement of Ms. Thomas follows:]
Prepared Statement of Mary Beth Thomas, Executive Director,
Tennessee Sports Wagering Council
Chairman, Ranking Member, and Members of the Subcommittee: My name
is Mary Beth Thomas, and I serve as Executive Director of the Tennessee
Sports Wagering Council. Thank you for allowing me the opportunity to
testify before you about how the State of Tennessee has structured the
regulation of sports betting and how the Tennessee Sports Wagering
Council works to ensure the integrity of sport.
A. Gambling in Tennessee
The Professional and Amateur Sports Protection Act, known as PASPA,
effectively outlawed sports betting nationwide with only a few
exclusions. PASPA was judicially overturned in 2018 when the Supreme
Court held that it infringed on state power in violation of the anti-
commandeering doctrine enshrined in the Tenth Amendment to the U.S.
Constitution. Since PASPA was overturned, state legislatures have
considered whether to prohibit or permit sports betting in their own
states, and if permitted, the terms under which sports betting would be
allowed. Today, 39 states and the District of Columbia allow retail
sports betting, online sports betting, or both.
Tennessee has a unique history with respect to gambling and games
of chance. Importantly, the Constitution of the State of Tennessee
provides that the Legislature has no power to authorize lotteries for
any purpose, other than a state lottery to provide financial assistance
to Tennesseans to attend post-secondary educational institutions. The
Legislature may not authorize games of chance associated with casinos,
including, but not limited to, slot machines, roulette wheels, and the
like.
The Legislature has traditionally adopted a restrictive policy
approach in authorizing even those games where chance is an element but
skill is the dominant factor, in part due to the long shadow cast by
Operation Rocky Top. Operation Rocky Top was an FBI and TBI undercover
investigation in the late 1980s into corruption related to charity
bingo, which led to over 50 convictions on assorted bribery and
corruption charges. The Tennessee Legislature subsequently passed
legislation creating the Tennessee Gambling Act, which provides that
``gambling'' is ``contrary to the public policy of this state and means
risking anything of value for a profit whose return is to any degree
contingent on chance.'' The Tennessee Gambling Act criminalizes both
gambling and gambling promotion. Accordingly, apart from the Tennessee
Education Lottery Corporation and until fantasy sports contests and
sports betting were authorized as games where skill is the dominant
factor and statutorily removed from the definition of ``gambling,''
there has been no other commercial gaming in Tennessee--no racetracks,
no online casinos or brick and mortar casinos, and no other retail
gambling locations.
B. The Tennessee Sports Gaming Act
Given that history, the Tennessee Sports Gaming Act, effective July
1, 2019, has provisions that are unique to Tennessee and address
concerns and priorities specific to our State. As presently enacted,
the Tennessee Sports Gaming Act creates our nine-member council called
the Tennessee Sports Wagering Council, which is authorized to hire an
Executive Director and other staff to carry out the day-to-day
responsibilities of licensing, compliance, investigation, and other
obligations under the statute. In Tennessee, it is a taxable privilege
to offer sports wagering pursuant to a license issued by the Council.
Accordingly, I may refer to licensed Tennessee sportsbooks as Licensees
or Operators. The Tennessee Sports Gaming Act permits only online
sports betting. There are no brick-and-mortar locations where wagers
may be placed, and there are no wagering kiosks permitted in the State.
The provisions of the Tennessee Sports Gaming Act emphasize an
effort to protect consumers from the predatory illegal market and to
put previously unlicensed wagering activity under formal oversight. To
that end, the Tennessee Sports Gaming Act empowers the Council with the
authority to investigate unlicensed sportsbooks and issue fines against
persons or entities accepting wagers without a license. Additionally,
the Tennessee Sports Gaming Act requires the Council, Licensees, and
registered Vendors to cooperate with investigations conducted by sports
governing bodies and law enforcement agencies, including providing
account-level betting information and data files relating to persons
placing wagers.
As some of you may well know, the University of Tennessee
Volunteers are a prominent and successful sports program in the SEC
conference, and Nashville has historically been called the ``Athens of
the South'' because of its number of colleges and universities. In line
with our State's proud emphasis on college education and college
sports, the state Legislature prohibited any wagers on individual
player prop bets for any college sports at any time and also prohibited
live or in-game team prop bets for any college sports. Other types of
wagers prohibited by statute are wagers on injuries, penalties, or
elements of chance in any sport. Recognizing the need for additional
prohibitions could arise that should not be delayed by the legislative
calendar or the rulemaking process, the Tennessee Sports Gaming Act
provides that a Licensee, sports team, sports league or association, or
institution of higher education may submit to the Council in writing a
request to prohibit a type or form of wagering or to prohibit a
category of persons from wagering as contrary to public policy, unfair
to consumers, or as affecting the integrity of a particular sport or
the sports betting industry. The Council will grant a request with good
cause.
Speaking of prohibited persons, our Sports Gaming Act provides that
sports betting is only available to persons who are 21 and up. The
Sports Gaming Act also lists persons and categories of persons who are
ineligible to directly or indirectly wager or bet on a sporting event
in Tennessee. This includes members and employees of the Sports
Wagering Council, certain persons associated with Licensees or Vendors,
and any persons prohibited by the rules of a governing body of a
collegiate sports team, league, or association, among others. Violation
of this ineligible person statute is a misdemeanor crime.
Our statute also provides for a voluntary state-wide self-exclusion
list, which is managed by the Council and shared with all Licensees. A
person who places their name on this list must be treated by Tennessee
sportsbooks as a prohibited participant. Their account must be
suspended, and the self-excluded person may not receive marketing or
advertising. All Licensees must also make available to players a
licensee-specific self-exclusion list and provide players with options
for limits on time spent betting and on amounts wagered.
Another protection within the Sports Gaming Act is that it is a
misdemeanor crime for a licensed sportsbook to offer, accept, or extend
credit to a bettor. A bettor may only fund their account through a
method that it initiated with cash, such as electronic bank transfer or
debit cards. Sportsbooks are prohibited from accepting credit cards in
Tennessee.
Before I end our discussion on the framework of Tennessee's
statutory environment, I'd like to discuss how the State of Tennessee
taxes Operators and how that funding is used. In Tennessee, we tax 1.85
percent of an Operator's handle, which means a percentage of the value
of all wagers placed. We are unique in the country by taxing handle but
have found that it eases &financial auditing requirements because of
its straightforward calculation. The handle tax includes promotional
wagers so free play offered by an Operator to players does not reduce
an Operators state tax liability. In addition, the State's revenue
stream does not rise or fall with betting outcomes like it would with a
revenue tax. In this way, the State of Tennessee does not succeed when
players lose.
The majority of taxes from sports betting in Tennessee support
various educational programs; however, since the original enactment of
the Tennessee Sports Gaming Act, 5 percent of the tax supports the
State of Tennessee's Department of Mental Health and Substance Abuse
for Services to oversee grant programs with organizations to provide
treatment services for individuals to address problem gaming and
gambling disorders and to establish prevention initiatives to reduce
the number of individuals with problem gambling or gambling disorders.
These grants have supported The Gambling Clinic, which is the oldest
gambling-focused treatment center in the United States and is operated
by the Tennessee Institute for Gambling Education and Research (TIGER)
at the University of Memphis. Collected taxes support research that
continues to build the reputation of Tennessee as a national and
international leader in the science related to preventing and treating
gambling harms. The amount available to the Department of Mental Health
to fund these grant programs from life to date is over $22 million.
C. Rules of the Tennessee Sports Wagering Council
The Tennessee Sports Gaming Act also provides the Council with
authority to promulgate rules. We have issued three sets of permanent
rules over the last four years with a goal of strengthening and
streamlining our rules over time to effectively protect consumers,
promote responsible gaming, and safeguard integrity. A uniform
requirement for minimum internal controls, operational standards, and
security protections provides a consistent regulatory framework for all
our Operators, providing an even playing field for offering sports
betting within the state.
Some of the revisions to our rules have included updating identity
verification and account security requirements. We have detailed ``Know
Your Customer (KYC)'' requirements so that there is no anonymous
account activity. We have added and strengthened requirements for
secondary authentication of identification requirements to prevent
identity theft and the creation of proxy accounts. Multifactor
authentication is required to login with a new device, or every two
weeks with a known device, and also when a debit card is added, which
works to prevent account takeovers by bad actors.
In addition, our staff reviews and approves operator minimum
internal controls, which address risk management procedures, event
offerings, technology requirements, and segregation of duties. For
example, a requirement in our most recently revised rules is for
Operators to segregate internal trading and risk management functions
from their marketing team functions.
Within their minimum internal controls, Operators must have
procedures for ensuring that wagers are only offered on sporting events
approved by the Council. Under our rules, any entity may petition for a
new sporting event. After Council staff receive a complete and detailed
description of the sporting event, evidence of that sport's governing
body rules and regulations, or its independent integrity monitoring
information, our staff assesses several factors, including whether
wagers on that sporting event are compatible with the public interest.
Our staff also discusses certain proposed sporting events with other
regulators and participants in the industry to consider issues that
others may have encountered.
An Operator's approved minimum internal controls must also have
procedures to prevent wagering by prohibited participants. All
Operators must require players to acknowledge that they are not a
prohibited participant during account creation and must provide further
specifics on how the State of Tennessee defines prohibited participants
in their Terms and Conditions or House Rules. To prevent minors from
wagering, Operators are required to suspend accounts when they have
actual knowledge that a payment method linked to an account belongs to
a person under 21. Account suspension is also required when a
sportsbook identifies a prohibited participant wagering in violation of
the Sports Gaming Act. Each Operator has different procedures to
identify wagering by prohibited participants. Some Operators have
relationships with the leagues and regularly check the athlete and
employee information they provide. Other Operators use services from
integrity monitoring providers, such as IC360s ProhiBet product.
Last, Operator internal controls must have procedures to
immediately notify the Council, either directly or through an integrity
monitoring provider, of unusual or suspicious wagering activity.
Unusual wagering activity and suspicious wagering activity are defined
in our rules and include wagering indicative of match-fixing, event
manipulation, or the misuse of inside sports information or other
prohibited activity. Operators and their required integrity monitors
watch for spikes in the total amount of wagers placed on a market, the
volume of wagers placed, unusual geolocation changes between logins,
rapid wager placement, the creation of new accounts that immediately
place specific wagers, or large prop bets. Our staff has access to the
real-time back office for each licensed sportsbook so that our staff
can conduct our own analysis of wagering activity when unusual or
suspicious wagering activity is flagged. Licensed Operators must also
report this information to the relevant sports governing body.
D. Regulatory Compliance in Tennessee
The regulatory framework established by the Tennessee legislature,
and the rules promulgated by the SWC, create a multi-pronged system of
checks and balances to ensure that Operators are set up to detect,
report and address a wide range of issues. Rather than a self-
certification process, it is one of collaboration, discussion and
ultimately, approval or disapproval of an Operator's license on the
merits of its application, followed by ongoing review and auditing of
an Operator's compliance with the law.
Prior to licensure, Tennessee Sports Wagering Council staff conduct
an extensive review of documents submitted by prospective Operators.
These include extensive background checks of key personnel; a review of
player-facing legal documents, like terms and conditions and house
rules; a review of internal controls; and a review of annual third-
party testing of operational and security systems to ensure those
controls work as stated. During the licensing process and before a
license is deemed complete, we correspond with Operators about
remediating issues identified by our staff. Because an app-based
online-only sportsbook includes a stack of technological processes
which operate together, our staff also confirm that the components of
this technology stack are filled by vendors who are separately
registered with the Council, particularly for sensitive components like
player account management, geolocation, and know-your-customer
services. We closely examine and analyze the substance and the merit of
these filings.
The state's regulatory function does not end with the approval of
an Operator's license. Rather, our team proactively identifies any gaps
in Operator compliance with multiple checks on Operators during the
term of their license. We require all Operators to have an internal
audit plan, with resulting reports submitted to our staff to review.
Our staff regularly reviews required numerical reporting, incident
reports, and player complaints to identify potential compliance issues.
We conduct monthly audits within our office on various financial
requirements and player-facing technical components. We review any
amendments to internal controls, terms and conditions, and house rules.
We review suspicious activity reports, not only to investigate and
refer identified crimes, but also to identify gaps in identity
verification and geolocation, which may have allowed a bad actor to
carry out that suspicious wagering activity. We review wagering
catalogues and conduct random audits of offered markets during high
volume times to see whether impermissible markets are offered. Where we
identify any compliance issues, we work together with our licensed
Operators to remediate that issue and issue letters of warnings or
fines where appropriate.
Tennessee Sports Wagering Council staff also serve as a resource
for education and outreach to the public. We have traveled to colleges
and universities and talked to their athletic coordinators. When an
Operator identifies a minor is using a parent's information to create
an account and place wagers, we send a letter to that parent alerting
them to the account use and providing responsible gaming information,
as well as the information for The Gambling Clinic. We have received
responses from many parents who expressed gratitude for being made
aware that their children were gambling without their knowledge and for
providing resources that they could discuss with their children.
Although not the explicit topic of this hearing today, it is
important to note that our team conducts extensive investigations into
illegal sportsbooks, which have limited identity verification, no or
different age requirements, and allow the use of credit, among other
harms to consumers. We have made significant efforts to identify
illegal sportsbooks, demand that they cease and desist operations in
Tennessee, and issue fines where operations continue. The Tennessee
Sports Wagering Council has issued over $800,000 in fines against
illegal sportsbooks. Seven illegal sportsbooks have left our state. In
addition, we have taken steps to stop these illegal sportsbooks from
mailing print publications into Tennessee, advertising on Tennessee-
based podcasts or radio stations, or otherwise promoting illegal
gambling within Tennessee. Those illegal sportsbooks are ultimately a
black hole of information where accounts cannot be monitored and
unusual and suspicious wagering activity that can identify integrity
issues cannot be detected.
E. Integrity Investigations in Tennessee
Specific to gaming integrity investigations, our licensed Operators
have requirements for reporting unusual and suspicious wagering
activity to the Tennessee Sports Wagering Council and suspending
accounts as I described above. We also receive alerts directly from
integrity monitoring providers, law enforcement, and the leagues. Over
the last four years, we have received hundreds of these reports from
integrity monitoring providers We will occasionally receive subpoenas
or requests for information from law enforcement with respect to
integrity issues, which our statute requires us to assist with by
providing account data and wager-level information.
As of May 14, 2026, the Tennessee Sports Wagering Council has
investigated 35 potential prohibited participant cases, with 10 of
those cases referred to a local District Attorney or other law
enforcement for their own assessment of criminal prosecution. When a
case is not criminally referred by our office, it is typically because
our investigation team found that the athlete or employee information
checked by the Operator was stale, meaning that an athlete or member of
athletic staff had been released from a team, graduated, or changed
jobs and was no longer under restrictions by a league or governing body
at the time a wager was placed. Our office makes that determination
after discussion with the league or school.
As of May 14, 2026, the Tennessee Sports Wagering Council has
investigated 25 potential integrity cases where suspicious wagering
activity occurred in Tennessee that could indicate the use of inside
sports information. While a few cases are currently pending, 17 are
closed and have been referred to the sports governing body or law
enforcement, including 13 that were referred to the FBI. Where an
integrity matter is not criminally referred, it is sometimes because
sharp (or ``expert'') wagering action has been flagged as a potential
integrity issue. In other words, a patron has placed a wager on what
would otherwise be an obscure betting line, but investigation indicates
the player has made that wager using their own analytics of a sport on
which they tend to place wagers.
In reviewing newsworthy integrity matters in preparation for this
hearing, I noted that many of these matters were initially identified
as potential proxy wagering or unlawful information sharing matters by
licensed sportsbooks and integrity monitoring providers long before the
media learned of the investigations. In many matters, suspicious
wagering activity was identified prior to a game, and accounts were
immediately suspended or suspended after the result was known. These
suspicious wagers were then reported to the leagues, sports governing
bodies, and law enforcement for investigation.
F. Conclusion
Although it may seem that there has been an increase in cases of
athlete manipulation or unlawful information sharing, our experience is
that legal and regulated sports betting has increased the volume of
data available, leading to a higher number of incidents reported and
acted upon. This subcommittee may support our office and fellow state
regulators in investigating and prosecuting illegal sportsbooks. From
my perspective, that would have the greatest impact on ensuring the
integrity of sport by removing avenues for anonymous betting, betting
without locational information, and betting without analytics to
identify proxy wagering. Any criminal behavior can be difficult to
wholly prevent, but it can be detected, identified, and enforced.
With the grants of authority given to our Council by the Sports
Gaming Act, our rules, which we continue to strengthen, the efforts of
our staff, and our strong partnerships with law enforcement, I believe
that Tennessee's current framework amply addresses attempts by bad
actors to rig outcomes on sporting events which may be wagered on in
Tennessee. I welcome your questions.
Senator Blackburn. Mr. Sadin, you're recognized.
STATEMENT OF SCOTT SADIN, CO-FOUNDER AND CO-CHIEF EXECUTIVE
OFFICER, INTEGRITY COMPLIANCE 360
Mr. Sadin. Thank you, Chairman Blackburn, Ranking Member
Hickenlooper, and members of the Subcommittee. Thank you for
the opportunity to appear before you today.
My name is Scott Sadin, and I'm the Co-Founder and Co-CEO
of Integrity Compliance 360, known as IC360. We are a
regulatory technology and compliance services firm specializing
in comprehensive integrity solutions for stakeholders across
sports, sports betting, and prediction markets. We work closely
with both collegiate and professional sports leagues, licensed
sports betting operators, prediction market exchanges, State
regulators, and law enforcement across the United States and
abroad.
In these few minutes, I want to highlight two core
principles I believe about today's existing integrity
monitoring ecosystem. First, the integrity infrastructure that
protects American sport is not theoretical. Since the Supreme
Court's 2018 decision in Murphy v. the NCAA, a robust framework
has developed across leagues, operators, regulators, law
enforcement, and integrity providers like us.
That framework has identified, investigated, and resolved a
meaningful number of integrity matters, from suspicious
wagering patterns to the misuse of insider information to
active match-fixing inquiries. The infrastructure exists and it
has worked. But just like any vertical within a complex
industry, the integrity ecosystem has room to improve and
mature as the space around it develops and evolves.
Second, the sports betting and prediction market ecosystems
involve, as mentioned, a wide range of stakeholders, and I
believe that no single participant can address its integrity
challenges alone. The integrity of competition depends on the
connective tissue between those participants. The quality of
information sharing, the depth of collaboration, and the
consistency of transparency.
IC360s mission is direct: to assist the successful
maturation of the regulated sports betting and event contracts
ecosystems through products and services that help protect the
integrity of sport. We work closely with many of the
stakeholders I have just mentioned, and that breadth of our
partner network is, in our view, a precondition for credible
integrity work. We regularly see the specific and often unique
integrity challenges that each group is facing.
That cross-participant visibility allows us to identify
patterns, risks, and emerging vulnerabilities. And one of our
central responsibilities is to bring those insights back to
relevant partners who may have been impacted by a circumstance,
assist in investigating the issue, and then collaborate to
mitigate any remaining areas of risk. In short, we endeavor
every day to embody the very connective tissue necessary for
cross-stakeholder integrity success.
I'd like to highlight three lines of work that help us play
that role. The first is integrity monitoring. Our system and
team of dedicated resources conduct 24-hour-a-day surveillance
of regulated markets for potentially suspicious activity. We
maintain a vast distribution network that allows operators to
expeditiously disseminate and respond to circumstances of
potential risk. Integrity alerts often come either from us or
directly from an operator themselves. This alerting structure
affords stakeholders holistic and actionable insight quickly
and efficiently.
I'd also like to highlight an IC360 product called
ProhiBet. Most sports leagues maintain a population of
individuals: athletes, coaches, officials, and other personnel,
who should be prohibited from wagering on their own sport
because of regular access to inside information and the ability
to exert undue influence. ProhiBet is the secure infrastructure
through which those designations move from governing body to
sportsbook operators and prediction markets, allowing
participating platforms to automatically permission accounts
before a prohibited transaction ever takes place. In our
experience, this level of proactivity is incredibly
consequential in preserving market and competition integrity.
Last, I want to touch on the significance of education. The
prohibited patron population I described in the context of
ProhiBet is also the population I believe most vulnerable to
approach, pressure, and targeting by bad actors. Their
awareness regarding the threats they may face, the rules that
apply to them, and the reporting pathways available when
something feels wrong, are significant contributing factors in
maintaining the integrity of sports. IC360 has delivered
hundreds of presentations and has reached hundreds of thousands
of athletes, coaches, and administrators, and we look forward
to continuing that work in close partnership with sports
leagues.
I'd like to close by reiterating the importance of
collaboration and the connective tissue between industry
stakeholders. Integrity monitoring is only effective because
operators report information, leagues share intelligence, and
regulators share casework. ProhiBet only works because
governing bodies designate, operators screen, and the
infrastructure between them is trusted. Education is only
impactful because leagues and institutions invest the time and
attention of the people closest to competition. The value we
believe IC360 brings is helping to make the collaborative work
of integrity possible at the scale and speed that the
contemporary market requires.
I appreciate the Subcommittee's attention to these issues,
and I welcome your questions and conversation. Thank you.
[The prepared statement of Mr. Sadin follows:]
Prepared Statement of Scott Sadin, Co-Founder and Co-Chief Executive
Officer, Integrity Compliance, 360 Inc.
I. Introduction
Chairman Cruz, Ranking Member Cantwell, Chair Blackburn and Ranking
Member Hickenlooper, and Members of the Subcommittee, thank you for the
opportunity to appear before you today. My name is Scott Sadin and I
serve as Co-Founder and Co-Chief Executive Officer of Integrity
Compliance 360 Inc., known as IC360, a global regulatory technology and
compliance firm specializing in comprehensive integrity solutions for
participants in sports, sports betting and daily fantasy, gaming,
iGaming, and prediction markets. As an independent sports integrity
firm, we work with professional leagues, collegiate conferences and
member institutions, state regulators, licensed sports betting
operators, event contract platforms and other stakeholders across the
integrity ecosystem.
I am grateful to the Subcommittee for its sustained attention to
this important set of issues and for the opportunity to be here on
behalf of IC360. The legalization and expansion of regulated sports
betting and event contracts on sports in the United States has created
meaningful opportunities and new challenges for those of us focused on
the integrity of competition. My intent today is to describe who IC360
is, the participants in the integrity ecosystem with whom we work, and
the products and services through which we contribute to protecting the
integrity of sport.
The views expressed in this statement are my own and reflect my
experience through my tenure at IC360. They do not represent the views
of any leagues, regulators, operators, or institutions with whom we
work. I welcome the Subcommittee's questions and the opportunity to
provide any additional information that may be useful as it continues
its work on these issues.
II. My Background
I serve as Co-Founder and Co-Chief Executive Officer of IC360. I
have had the privilege of building IC360 from an early-stage company
into what it is today--one of the most extensive independent integrity,
compliance, and regulatory technology firms operating in the U.S.
sports and gaming space. IC360 offers over a dozen products and
services and has more than two hundred partner organizations globally.
My path to this work began in financial services. Earlier in my
career, I held compliance and surveillance roles at registered
investment advisers and alternative investment managers, including
Apollo Global Management and MSD & BDT Partners. The discipline of
trade surveillance--building systems that detect anomalous patterns
across vast data sets in real-time and investigating those patterns
with care and consequence--translated directly to the work of
monitoring legal sports betting markets when that opportunity emerged.
What has kept me in this field, and what I hope comes through in
these remarks, is a personal conviction about the importance of our
commitment to this work. I have been on the front lines of dozens of
sports integrity investigations over the years--matters that have
touched professional and collegiate athletes, officials, coaches, and
at times the broader public--and I have seen, at close range, the value
IC360 has brought in both identifying and investigating integrity-
related circumstances. I am personally committed to ensuring that the
integrity infrastructure protecting competitions and events keeps pace
with the market that has matured around it, and that commitment is the
lens through which I offer the observations that follow.
III. Core Concepts
Before I provide detail about IC360s products, I felt it important
to emphasize the following two core concepts with respect to the
integrity monitoring ecosystem:
1. In the years since the Supreme Court's 2018 decision in Murphy v.
NCAA, a functioning and comprehensive framework has developed
across sports leagues, regulators, licensed operators, and
independent integrity providers. That framework has identified,
investigated, and resolved a meaningful number of integrity
matters--from suspicious wagering patterns and the misuse of
insider information to active match-fixing inquiries--and has
done so in ongoing coordination with state and Federal
authorities, and law enforcement where appropriate. The
infrastructure exists and it has been effective. The
conversation before the Subcommittee today, in my view, should
be framed not as a question of whether such an infrastructure
should exist, but as a question of how it should continue to
mature, evolve and improve.
2. One core principle has remained constant throughout the evolution
of regulated sports betting: no singular sports league,
sportsbook operator, regulatory body, or supplier can
successfully tackle the complex and nuanced sports integrity
landscape alone. It requires strong engagement, collaboration
and transparency across those differentiated stakeholders to
combat bad actor innovation. Any improvement to the existing
sports integrity framework should focus on increasing the
connective tissue between those market participants.
Everything we do at IC360 is informed by these core principles. We
recognize that the work of maintaining proactive monitoring requires
sustained investment in new detection capabilities, new data sources,
new analytical methods, and new forms of cross-stakeholder
coordination. That is a permanent and evolving feature of this work,
not a phase of it.
IV. About IC360--Who We Are, Whom We Serve, and Why This Work
Matters
At IC360, our mission is direct and durable: to assist the
successful maturation of the regulated sports betting and sports event
contract ecosystem through products and services that protect the
integrity of sport. Everything we do is in service of that mission.
We work with more than 200 organizations globally. Our client base
includes each of the seven major United States professional sports
leagues, a growing list of emerging professional properties, and 12
Division I collegiate conferences, including each of the Power 4
conferences. We also work with more than 125 licensed sports betting
and daily fantasy sports operators, 14 prediction-market exchanges, and
numerous regulators and law enforcement agencies across the United
States and abroad.
The breadth of that client base is, in our view, the precondition
for credible integrity work--and it confers a particular vantage point
on the issues before this Subcommittee. We see, on a regular basis, the
specific and often unique integrity challenges that each category of
stakeholders are facing. That cross-stakeholder visibility, handled
with care, allows us to identify patterns, risks and emerging
vulnerabilities. One of our central responsibilities is to bring those
insights back to the stakeholders best positioned to act on them. Our
positioning as an independent integrity provider affords us the
opportunity and responsibility to assemble a picture from across the
ecosystem, route the right information to the right party, and assist
in converting the resulting signals into action.
A key differentiator for IC360 is that we operate conflict-free.
IC360 does not offer trading, odds creation, risk management, or any
product whose interests could be affected by the outcome of an
integrity matter we are monitoring. Our products exclusively work to
enhance the compliance and integrity ecosystem. That posture matters
not because the operators, leagues, and regulators with whom we work
are anything less than fully committed to integrity--they are, and many
invest substantial resources of their own in these endeavors--but
because the credibility of the picture we produce depends on the
absence of competing interests in producing it.
This approach allows us to function as the connective tissue across
the integrity ecosystem. We often sit between leagues and operators on
credible suspicious-betting alerting. We work closely with governance
bodies and operators on prohibited bettor and trader identification. We
collaborate with regulators and licensed platforms when circumstances
warrant further investigation. The strength of the integrity
infrastructure in this country is a function of how well that
connective tissue holds--how much information flows through it, how
reliably, and how comprehensively. The more engagement, collaboration,
and transparency among leagues, operators, integrity providers,
regulators and law enforcement, the more protected the integrity of
competition is.
V. IC360s Products and the Value They Bring
With that framing in mind, I want to briefly describe the three
principal lines of work through which IC360 contributes to the
connective tissue I have described.
A. Integrity Monitoring
Integrity monitoring refers to the twenty-four-hour-a-day
surveillance of regulated betting markets globally for indications that
something has occurred, or is occurring, outside the normal patterns of
wagering, event contracts and competition. It is the work most often
associated with our category, and it is the work that has produced many
of the integrity outcomes the public has come to expect of a well-
functioning regulated market.
The picture we build rests on four principal categories of data,
and our analytical method rests on identifying correlated anomalies and
emerging trends across them.
1. Market odds and pricing. Movements in betting odds and event
contracts are the most immediately legible signal that
something in a market may warrant further investigation.
Significant, unexplained movement--particularly in directions
inconsistent with publicly available information--can often be
the first indication that an alert is appropriate.
2. Bet-level detail. IC360 ingests bet-level data directly from a
meaningful subset of licensed sportsbooks covering wagering
activity on their platforms. This level of detail is essential
to identifying coordinated activity, repeat patterns, and
platform-specific anomalies that aggregate market odds and
price data alone cannot reveal.
3. Availability information. We track news and other open-source
data related to the availability of impactful athletes and
coaches--injuries, absences, and other status changes.
Significant market movement in advance of the public release of
availability information on an impactful figure can indicate
the misuse of inside information, a circumstance that warrants
close investigation.
4. Officiating statistics. We collect publicly available data on
officiating performance and use it to develop behavioral
profile patterns on as many officials as we can. A meaningful
deviation from their established behavioral norm is an
analytical signal--and one that is often cross-referenced
against the other categories of data above.
Anomalies, of course, occur constantly across each of these
categories in isolation. What our analytical work looks for is the
correlated abnormality--the situation in which signals across several
of these categories cluster around a single event, market, or actor--
and the trend formation in which a series of such clusters point toward
a potentially sustained vulnerability.
Alerts on our platform are generated through three principal
pathways:
1. IC360s own identification of circumstances warranting further
investigation, derived from the cross-category analysis
described above.
2. Operator-initiated reporting of suspicious activity observed on
the operator's own platform, which the operator routes to its
independent third-party integrity monitor for further analysis
and dissemination across the ecosystem. These notifications are
critical since IC360 is ultimately limited to what data it is
afforded. We consistently recommend our operator partners be
overly inclusive in reporting.
3. Regulatory or other governing-body identification of potentially
suspicious activity.
When an alert is generated, IC360 distributes the relevant details
and a structured survey to operators across the ecosystem. The survey
asks, among other questions, the following:
Whether the market in question was offered on the platform;
Whether the volume in that market was outsized relative to
expectations;
Whether previously dormant accounts were transacting in the
market in question;
Whether new account openings appeared to target the market
in question; and
Whether any flagged or marked patrons were transacting in
the market in question.
The IC360 system parses the responses into a consolidated report
that gives the relevant stakeholders--typically the affected league or
governance body, and, where appropriate, regulators and law
enforcement--a comprehensive and holistic view of the matter, including
whether the suspicious activity appears isolated to one operator or one
market or, instead, is widespread across the ecosystem. Both the
willingness of operators to report suspicious activity to their
independent monitors in the first instance, and their complete and
timely responsiveness to surveys when alerts are circulated, are of
paramount importance to the integrity of regulated competition. The
work is collaborative, and the quality of the resulting picture is a
direct function of how fully participants engage.
B. ProhiBet
Prohibited patrons across U.S. sport often refers to persons who
should be prohibited from betting or trading on certain events who, by
virtue of their role, have regular access to non-public information
about a competition, or who have the consistent ability to exert undue
influence over its outcome. These include, in most sports, athletes--
both professional and collegiate--coaches, referees, athletic trainers,
administrators, and certain associated individuals. Each governing
body, league, and member institution maintains its own designation of
prohibited patrons, and those designations are foundational to the
integrity rules of the relevant sport.
IC360s ProhiBet platform is the secure technology infrastructure
through which prohibited-patron information moves from a list manager--
typically a sports governing body--to a platform on which such
individuals could otherwise transact, including sportsbooks, prediction
markets, and daily fantasy sports platforms. The information exchanged
between those parties through the ProhiBet platform is
cryptographically hashed, so that the personal identifying information
of designated individuals never leaves the list manager's environment.
With that infrastructure in place, operators can proactively permission
the accounts of prohibited patrons before any wager or prohibited
transaction is placed--ensuring that those individuals are not able to
transact in markets where they may possess inside information, exert
undue influence or are regulatorily prohibited from doing so.
Engagement with this technology solution enables a preemptive form of
permissions that is, in our experience, among the most consequential
single contributions a stakeholder can make to proactive integrity
monitoring.
The ProhiBet platform today supports more than 150 stakeholders,
has performed close to one billion account checks, and has surfaced
more than sixty thousand alerts. Each of those metrics reflect a
category of harm that did not occur because the infrastructure to
prevent it was in place.
C. Education
IC360 recognizes the importance of education and awareness training
for stakeholders across the sports betting, daily fantasy sports and
event contract ecosystems. The availability of high-quality onsite and
digital education resources to sports property stakeholders--athletes,
coaches, officials, administrators, and support personnel--is, in our
experience, among the most valuable interventions in preventing bad
actors from compromising competition integrity.
Our curriculum covers, among other topics, integrity-related case
studies, bad-actor profiles, and emerging vulnerabilities. We have
delivered hundreds of presentations and have reached hundreds of
thousands of athletes, coaches, and administrators, through both in-
person training and our digital learning platform. The curriculum is
regularly refreshed--for the reasons I described earlier about the pace
at which the threat environment evolves--and is delivered in close
partnership with conference compliance offices, league integrity teams,
and individual member institutions. It is, like the other lines of work
I have described, fundamentally a collaboration.
D. The Centrality of Collaboration
I want to close this section on the same note with which I opened
it; each of these three lines of work depends on collaboration.
Integrity monitoring works because operators report information,
leagues share intelligence, and regulators share casework. ProhiBet
works because governing bodies designate, operators screen, and the
infrastructure between them is trusted. Education works because leagues
and institutions invest the time and attention of the people closest to
competition. The value we believe IC360 brings is, in the end, the role
we play in making the collaborative work of integrity possible at the
scale and speed that the contemporary market requires.
VI. Conclusion
I want to thank the Subcommittee again for its attention to these
issues and for the opportunity to share these perspectives on behalf of
IC360. The work of protecting the integrity of competition in an
environment of rapidly expanding legal sports betting and sports event
contracts, in our experience, is neither glamorous nor easily reducible
to a single intervention. It is instead the steadfast commitment to
ensuring that the right information moves to the right party at the
right time, that the rules of every sport remain enforceable in complex
markets, and that the people closest to competition have the awareness
and the tools to surface concerns when they arise.
That work depends on leagues, operators, regulators, and
independent integrity providers continuing to invest in collaboration
with one another. I am thankful for the cooperation and collaboration
we receive from our stakeholder partners across the sports betting and
sports event contract ecosystems and for their willingness to adapt as
these industries evolve. We are committed, for our part, to playing the
role we are positioned to play. I welcome the Subcommittee's questions
and look forward to supporting its continued attention to these issues
in whatever way is most useful.
Senator Blackburn. Congressman McHenry.
STATEMENT OF HON. PATRICK McHENRY, SENIOR ADVISOR, THE
COALITION FOR PREDICTION MARKETS
Mr. McHenry. Thank you, Chairman Blackburn, Ranking Member
Hickenlooper, and distinguished members of the Committee. Thank
you for the opportunity to testify, and thank you for the warm
welcome on this side of the Capitol complex for a lowly former
House member. I will say the chambers are much nicer over here.
[Laughter.]
Mr. McHenry. I appear before you on behalf of the Coalition
for Prediction Markets, including U.S. regulated companies like
Kalshi, Crypto.com, Robinhood, Coinbase, and Underdog. My
experience as a former Chair of the House Financial Services
Committee is grounded in financial markets regulation, market
structure, and market integrity, not in sports betting or
traditional sportsbooks, and that's the lens through which I
will speak today.
Throughout my time in Congress, I focused on policies that
expanded participation in financial markets for average
everyday Americans, democratized access to financial tools
historically reserved for large financial institutions,
modernize our laws to foster innovation and facilitate capital
formation, and strengthen confidence in market integrity.
My work with the Coalition for Predictive Markets is a
continuation of those same principles. The question before us
is not whether innovation should exist, but whether emerging
market-based products will operate inside a transparent,
federally regulated, onshore framework with robust consumer
protections and oversight.
Casinos and traditional online sportsbooks and prediction
markets are fundamentally different products governed by
different legal frameworks and subject to different regulatory
structures, and conflating the two does little to advance our
shared goal of protecting consumers.
In a casino or sportsbook, the house sets the odds and
profits when customers lose. In a prediction market exchange,
participants trade with one another, while the platform earns
transaction fees for facilitating the market. As a result, the
incentives are fundamentally different. Prediction markets
benefit from greater participation, liquidity, and more
accurate information, not from consumers losing money.
That distinction was recently reinforced by the Third
Circuit Court of Appeals, which held that sports events
contracts are governed by the Commodity Exchange Act, and the
Dodd-Frank Act. It's also important to recognize that sports
event contracts are only one part of a much broader market, as
categories like entertainment and politics grow quickly in
share. These products are a part of a broader trend toward
democratizing access to financial and informational tools that
were once limited to institutions and large market
participants.
Coalition members and coalition companies share the
League's interest in protecting sports integrity and want to
work collaboratively to address concerns and, where
appropriate, share information and data that help protect the
ecosystem. Customers must trust--must trust that suspicious
activity will be identified and addressed appropriately. Unlike
many sportsbooks and unregulated operators, coalition members
do not offer micro bets that are particularly vulnerable to
manipulation, such as wagers on the next pitch or the next
play.
Notably, the sports integrity scandals that have made
headlines in recent days and recent--recent years and recent
days involving the NBA and MLB players using insider
information and compromised game outcomes occurred on
traditional online sportsbooks, not on prediction markets
exchanges.
Coalition members are federally regulated and overseen by
the CFTC and operate under extensive compliance obligations,
including real-time surveillance, trade reporting requirements,
Bank Secrecy Act compliance, know your customer and anti-money
laundering controls, and comprehensive rulebook reviewed--
rulebooks reviewed by Federal regulators.
They have extensive monitoring that is ongoing, and
regulated prediction markets prohibit trading not only by
individuals with material public and nonpublic information, but
also by anyone capable of influencing the outcome of a
contract, including players, coaches, referees, league
employees, and even Members of Congress on political contracts.
Protections that frankly go well beyond Federal securities laws
requirements and beyond standards applied to traditional
sportsbooks as well.
Importantly, customers on our platforms are also subject to
uniform Federal protections that apply nationwide, exceeding
the consumer protections of casinos and sportsbooks, which are
governed by a patchwork of State laws. While not the focus of
this hearing, coalition members also share concerns about
contracts tied to war, assassination, and acts of violence, and
those are proliferating in unregulated platforms, and we share
the interest that those are not in the public interest. These
kinds of contracts are already prohibited under U.S. law.
And welcome your questions today on the ways that we can
enhance market integrity, protect the integrity of sports, and
consumer protection writ large. I yield back.
[The prepared statement of Mr. McHenry follows:]
Prepared Statement of Hon. Patrick McHenry, Former Chairman, House
Financial Services Committee On Behalf of the Coalition for Prediction
Markets
Chairman Blackburn, Ranking Member Hickenlooper, and distinguished
Members of the Subcommittee: thank you for the opportunity to testify
today. It is a pleasure to be back among former colleagues.
I appear before you on behalf of the Coalition for Prediction
Markets, which includes U.S.-regulated companies like Kalshi,
crypto.com, Robinhood, Coinbase and Underdog. My experience as the
Former Chairman of the House Financial Services Committee is grounded
in financial markets regulation, market structure, and market
integrity--not in sports betting or traditional sportsbooks--and that
is the lens through which I will speak today.
Throughout my time in Congress, I focused on policies that expanded
participation in financial markets for everyday Americans, democratized
access to financial tools historically reserved for institutions,
modernized our laws to foster innovation and facilitate capital
formation, and strengthened confidence in market integrity. My work
with the Coalition for Prediction Markets is a continuation of those
same principles. The question before us is not whether innovation
should exist, but whether emerging market-based products will operate
inside a transparent, federally regulated framework with robust
consumer protections and oversight.
Casinos/traditional online sportsbooks and prediction markets are
fundamentally different products, governed by different legal
frameworks and subject to different regulatory structures. Conflating
the two does little to advance our shared goal of protecting consumers.
In a casino or sportsbook, the house sets the odds and profits when
customers lose. In a prediction market exchange, participants trade
with one another, while the platform earns transaction fees for
facilitating the market. As a result, the incentives are fundamentally
different: prediction markets benefit from greater participation,
liquidity, and more accurate information, not from consumers losing
money. Participants trade directly with one another and can enter or
exit positions at any time, reflecting the peer-to-peer, market-based
nature of these products.
That distinction was recently reinforced by the Third Circuit Court
of Appeals, which held that sports event contracts are governed by the
Commodity Exchange Act and Dodd-Frank.
It is also important to recognize that sports event contracts are
only one part of a much broader market, as categories like
entertainment and politics grow quickly in share. These products are
part of a broader trend toward democratizing access to financial and
informational tools that were once limited to institutions and large
market participants.
Coalition companies share the leagues' interest in protecting
sports integrity and want to work collaboratively to address concerns
and, where appropriate, share information and data that help protect
the ecosystem. Customers must trust that suspicious activity will be
identified and addressed appropriately.
Unlike many sportsbooks and unregulated operators, coalition
members do not offer micro-bets that are particularly vulnerable to
manipulation, such as wagers on the next pitch or next play. Notably,
the sports integrity scandals that have made headlines in recent
years--involving NBA and MLB players, insider information, and
compromised game outcomes--occurred on traditional online sportsbooks,
not on prediction market exchanges.
Coalition members are federally regulated and overseen by the CFTC,
and operate under extensive compliance obligations, including real-time
surveillance, trade reporting requirements, Bank Secrecy Act
compliance, know-your-customer and anti-money laundering controls, and
comprehensive rulebooks reviewed by Federal regulators.
Just as securities and derivatives exchanges maintain surveillance
systems designed to detect insider trading, market manipulation, and
coordinated misconduct, federally regulated prediction markets are
subject to extensive monitoring, reporting, and compliance obligations
enforced by the CFTC. Regulated prediction market companies prohibit
trading not only by individuals with material nonpublic information,
but also by anyone capable of influencing the outcome of a contract--
including players, coaches, referees, league employees, and even
Members of Congress on political contracts--protections that go well
beyond what Federal securities laws require and beyond the standards
applied to traditional sportsbooks.
Importantly, customers on our platforms are also subject to uniform
Federal protections that apply nationwide, exceeding the consumer
protections of casinos and sportsbooks, which are governed by a
patchwork of state laws.
While not the focus of this hearing, coalition members also share
concerns about contracts tied to war, assassination, and acts of
violence proliferating on unregulated platforms, and raise serious
questions of public interest. These kinds of contracts are already
prohibited under U.S. law, and our members do not offer them.
I want to conclude by reiterating that consumer protection and
sports integrity matter deeply. We look forward to continuing to work
with this Committee on bipartisan efforts to reinforce market integrity
and protect consumers, safeguard sports integrity, and preserve
American innovation. Thank you.
Senator Blackburn. Dr. Levant.
STATEMENT OF DR. HARRY LEVANT, DIRECTOR OF GAMBLING POLICY,
PUBLIC HEALTH ADVOCACY INSTITUTE
Dr. Levant. Good morning. Chairman Blackburn, Ranking
Member Hickenlooper, members of the Subcommittee, thank you for
the privilege of testifying today and the privilege of joining
this panel of distinguished witnesses.
Before I begin, take just a moment, Chairman Blackburn, and
extend my thanks to you specifically. It was December 2024 when
I testified before the Senate Judiciary Committee, and
following that hearing, you and I had a brief exchange in which
you said to me, I am going to remain involved in this issue to
protect children and families. You have been a person of your
word. The people of Tennessee benefit from that, and frankly,
the people and families of America benefit from you remaining
involved in this important issue. I thank you for that.
During that same conversation, I was joined by Senator
Durbin, Senator Blumenthal, and I believe it was Senator
Tillis, all expressing similar feelings. This is not a
Republican issue or a Democrat issue. This is a human issue
regarding an addiction crisis that needs to be addressed and
prevented.
I am a gambling addict in recovery. I made my last bet on
April 27, 2014, and survived a near-suicide attempt that same
night. I made my first bet when I was 15 years old and went to
the casino for the first time when I was 16. I never had a
healthy relationship with gambling, but it would take 30 years
till I fully understood that. It was in 2013 that my world was
collapsing, much like Senator Hickenlooper described someone he
knew, and I reached for my drug of choice, which was gambling,
and I annihilated myself and everything in my wake.
I went through all of my money, all money I could borrow,
and eventually all money I could steal. And on February 13,
2015, I stood in a courtroom in Philadelphia, Pennsylvania--not
unusual for me since I'd been a lawyer for almost 25 years--but
on this day, I stood in that courtroom as a defendant, and I
pled guilty to 13 financial felonies, all related to my
gambling addiction.
And during my sentencing hearing, I made a vow. And that
vow was, if I could get well--and at that time it was a very
big if--but if I could get well, I would dedicate whatever my
future looked like to helping prevent--prevent being the
operative word--other people, particularly young men, from
suffering a similar fate.
That led me, after 4 or 5 years of treatment, to La Salle
University in Philadelphia, where I earned a master's in
professional clinical counseling, and upon graduating, began
treating people suffering with gambling addiction. But I
realized I wasn't doing anything on the prevention side. So I
went back to school again, earned a doctorate in public policy,
where my research was all about how to address prevention.
In the couple of minutes I have left, I want to address 3
issues and then look forward to a more robust conversation.
Issue number one: Are prediction markets gambling? Most
certainly yes, when it comes to sports contracts, and there's
two simple reasons why. First, meets the very basic definition
of gambling, which is defined as betting or staking something
of value with consciousness of risk and hope of gain on the
outcome of a game, contest, or an uncertain event whose result
may be determined by chance or accident. That's gambling.
That's what prediction markets do.
Next, to the end user, American public, there's absolutely
no discernible difference. They are gambling. Most importantly,
the prediction market companies themselves have acknowledged it
is gambling. And I'll quote that later on.
I want to move forward, though, to integrity and offer to
this committee a broader definition of integrity. Integrity
isn't just can the American people trust the result of the
Cubs-Cardinals game. Each of us now have to make that decision
for ourselves because sports have sold their integrity to the
gambling industry. There's a much broader issue here, which is
how the sports leagues, including the NCAA, the owners, the
players, have partnered for enormous financial gain in the
billions with the gambling industry and prediction markets to
sell their real-time data to the gambling industry to create
something called micro-betting and its close cousins, Same-Game
Parlays and prop bets.
This is what is crushing people and families, particularly
young men. It is called micro-betting, and I'm here today to
talk to you about it. Because I'm also here to issue a warning.
The Senate doesn't do something, if Congress doesn't do
something, our friends at the NFL have just in the last 3
months announced in partnership with their partners, a company
called Genius Sports, the launch of a brand new product called
BetVision, which they describe, ``As an immersive, intelligent,
interactive tool to convert traditional fans into high
engagement in-play bettors, which are significantly more
profitable for Genius and for our sportsbook partners.''
They have their eyes on us and our children to convert into
in-game micro-bettors. It is fundamentally dangerous. I look
forward to speaking in more detail about it. Thank you.
[The prepared statement of Dr. Levant follows:]
Prepared Statement of Dr. Harry Levant, MA, PCC, ICGC-I, Director of
Gambling Policy, Public Health Advocacy Institute
Introduction--Prediction Markets Sports Contracts are Gambling Products
Chairman Cruz, Chairman Blackburn, Senator Cantwell, Senator
Hickenlooper, and members of the Subcommittee on Consumer Protection,
Technology, and Data Privacy, thank-you for the opportunity to testify
about this timely and consequential issue and for your consideration of
the mental health consequences of the unprecedented expansion of sports
gambling in America. Make no mistake, the unprecedented expansion of
sports gambling, through online platforms and prediction markets, has
created a mental health crisis similar to what the country experienced
with the opioid industry. We stand at the precipice of a mental health
disaster impacting the lives of children, young adults, individuals,
and families throughout the country. Time is of the essence for
Congress to recognize the magnitude of the problem and take decisive
action to install common sense Federal safety standards governing
sports gambling in America.
Before examining the scope and magnitude of this mental health
crisis it seems prudent to address the procedural question of whether
prediction markets offering action on sporting events constitute
gambling. With appropriate respect to our Federal and state courts,
which are presently addressing the issue in several jurisdictions,
there is no doubt that prediction market contracts on sports are
gambling. There is a plethora of reasons that prediction markets on
sports are gambling. I will highlight the overriding factors which
demonstrate that sports prediction markets constitute gambling on
sports.
Sports prediction markets meet the universally accepted and plain
meaning definition of gambling. Sports gambling is defined as the
betting or staking of something of value, with consciousness of risk
and hope of gain, on the outcome of a game, a contest, or an uncertain
event whose result may be determined by chance or accident or have an
unexpected result by reason of the bettor's miscalculation.\1\ This
definition precisely describes what prediction markets offer to the
public in the form of sports gambling futures contracts. The public is
induced by a market maker to wager and risk money on the unknown
outcome of a sporting event or micro portion thereof. The financial
risk in pursuit of greater reward predicated on an unknown outcome in a
game, contest, or match is gambling.
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\1\ Glimne, Dan. ``gambling''. Encyclopedia Britannica, 13 May.
2026, https://www.britannica.
com/topic/gambling. Accessed 15 May 2026.
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Prediction market companies wrongly suggest that because the
``house'' takes its cut off the top of the wager rather than on the
outcome of the game, sports predictions somehow do not constitute
gambling. The fatal flaw in this argument is well-illustrated by the
game of poker. It is played in casinos all over the world. In every
casino, the house takes its cut (known as the ``rake'') off the top of
each hand/pot. This is the same model utilized by prediction market
companies offering gambling contracts on sports. It is also like
parimutuel gambling where bets are pooled and divided according to
outcome minus what the house keeps as its fee or ``takeout.''
Next, for the American public, there is no discernable difference
between prediction markets and online gambling companies when it comes
to sports gambling. Both are gambling; plain and simple. Wagers are
placed on sporting events or micro portions thereof; there are winners
and losers; access to action never stops; and the house (the prediction
market platform) always wins. Prediction markets offering sports
futures contracts deliver the known addictive product of gambling\2\ to
the public in an increasingly dangerous form and doing so in
partnership with other gambling companies and the sports leagues
themselves. Such is the gambling business model.
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\2\ American Psychiatric Association. (2013). Diagnostic and
statistical manual of mental disorders (5th ed.). doi.org. Disorder
code 312.31 (F63.0).
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The gambling industry itself has conclusively demonstrated that
sports prediction markets constitute sports gambling. Sports gambling
market leaders DraftKings and FanDuel have quickly become the first two
online sports gambling platforms to openly embrace prediction markets
and target the public with this latest form of sports gambling.
According to DraftKings CEO, Jason Robbins, prediction markets are
sports gambling:
Our core business is strong, and profitability is inflecting.
That gives us the firepower to press our advantage in
Predictions. With our Super App, market making capabilities,
proprietary exchange, and combos coming together, we intend to
establish a leadership position in Sports Predictions before
year-end . . .''
. . . We have also launched market making, which unlocks access
to an additional layer of the value chain. Market making is
already generating a positive return for us. In the coming
weeks, we expect to launch our proprietary exchange and to
begin offering combos. Together, these moves will accelerate
innovation, improve the customer experience, and strengthen our
economics.\3\
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\3\ Steve Ruddock, ``Burning Down the House: Prediction markets are
peer-to-peer, but increasingly the ``peer'' on the other end is looking
more and more like a sportsbook.'' Straight to the Point. May 11, 2026.
https://straighttothepoint.substack.com/p/burning-down-the-house
Mr. Robbins is not alone in his direct acknowledgement that sports
prediction markets constitute gambling on sports. Peter Jacobson, CEO
of Flutter, Inc (parent of FanDuel) is even more bold with his clear
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assertion that prediction markets are gambling products:
We believe our world-class, proprietary pricing capabilities
can also unlock a significant market-making opportunity. In
April, we began trialing market-making services on a major,
third-party prediction market platform. Early indicators have
been encouraging, and we expect to launch our market-making
platform in the coming months . . .
. . . market making is an exciting opportunity, and I think it
is a great way to showcase the quality of our pricing
capabilities that we have in the business more generally. When
we think about the opportunities, it is principally around
combos, and we are going to be market making on as many
platforms as we can. I think it is a good opportunity for us to
monetize our pricing expertise in doing so.'' \4\
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\4\ Id.
This aggressive move by FanDuel to expand its sports gambling with
prediction markets is a further push by its owner, Flutter, the world's
top sports gambling company, to dominate sports gambling here in
America. In Europe, Flutter has launched BetFair Predicts, a global
prediction market enterprise offering gambling contracts on sports,
politics, and entertainment.\5\ The stated purpose of BetFair Predicts
is to coordinate with FanDuel in America and offer worldwide sports
prediction market gambling.\6\ This expands Flutter/FanDuel's role in
prediction market gambling by positioning the company as market makers,
i.e., the gambling house setting the odds for sports contracts.\7\ This
is yet another example of how the gambling prediction markets are
inherently part of the gambling industry business model.
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\5\ Rob Fletcher, ``Flutter bet launches Betfair prediction markets
product.'' Next IO News, April 9, 2026. https://next.io/news/
prediction-markets/flutter-beta-launches-betfair-prediction-markets/
\6\ Justin Byers, ``Flutter CEO vows to `sharpen' execution as
FanDuel undergoes changes.'' SBC Americas, May 12, 2026. https://
sbcamericas.com/2026/05/12/flutter-ceo-fanduel-changes/
\7\ Finance Magnates, ``FanDuel owner Flutter is making money from
prediction markets as a market maker.'' Trading View News, May 7, 2026.
https://www.tradingview.com/news/finance
magnates:43599d90b094b:0-fanduel-owner-flutter-is-making-money-from-
prediction-markets-as-a-market-maker/
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Even more chilling is how brazenly Flutter/FanDuel seeks to extract
more losses from the American public. In an investor day conference,
the FanDuel CEO and CFO openly discussed strategies to target gamblers
with bonus bets to keep people more aggressively engaged with its
sports gambling/prediction markets:
``If we look back at last year, it was very evident, with the
benefit of hindsight, that we were slightly inefficient in our
generosity approach . . .
. . . We've got our team from sports betting working with our
financial team to make our generosity deployment more
efficient, so we get more bang for our buck in the U.S.'' \8\
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\8\ Justin Byers, ``Flutter CEO vows to `sharpen' execution as
FanDuel undergoes changes.'' SBCAmericas, May 12, 2026. https://
sbcamericas.com/2026/05/12/flutter-ceo-fanduel-changes/
This means that FanDuel plans to expand its online sports and
prediction market gambling loyalty program to all online sports
wagering markets by the start of the upcoming NFL season.
To remove even a scintilla of doubt as to whether prediction
markets constitute gambling, we need to look no further than the
uncontroverted data regarding gambling losses. Thus far in 2026, people
in America have lost more than $100 million on Kalshi prediction
markets just by gambling on sports parlays (which Kalshi calls
``combos'').\9\ The hold rate (amount won by Kalshi from these wagers)
is an astonishing 15 percent and sports parlays now account for nearly
23 percent of wagers on the Kalshi platform.\10\
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\9\ Bernstein and Akabas,'' Kalshi retail bettors have lost $100m+
on parlays this year.'' Sportico, May 13, 2026. https://
www.sportico.com/business/sports-betting/2026/kalshi-parlays-retail-
bettor-losses-rfq-1234894471/
\10\ Id.
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In January 2025, Kalshi launched sports gambling futures contracts
in all fifty states.\11\ This was despite the fact that sports gambling
was, at that time, legal in only thirty-eight states.\12\ At its
launch, Kalshi boldly proclaimed itself the ``First Nationwide Legal
Sports Betting Platform.'' \13\ Advertising on social media, including
Instagram and Tik-Tok, announced the arrival of ``The First Nationwide
Legal Sports Betting Platform,'' making ``Sports Betting Legal in all
50 States on Kalshi.'' \14\
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\11\ Purdum and Surendran, ``How Kalshi and prediction markets are
disrupting sports betting.'' ESPN, June 2, 2025. https://www.espn.com/
espn/betting/story/_/id/45377686/kalshi-prediction-markets-disrupt-
sports-betting
\12\ Id.
\13\ Benjamin Schiffrin, ``Everyone should go on Kalshi and see for
themselves whether it looks like sports betting or derivatives
trading.'' Better Markets, May 6, 2026. https://better
markets.org/analysis/everyone-should-go-on-kalshi-and-see-for-
themselves-whether-it-looks-like-sports-betting-or-derivatives-trading/
\14\ Ho Chunk Nation v Kalshi, Inc. UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN, No. 25-cv-698 (August 28, 2025).
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Initially, the online gambling industry shrugged off the launch of
sports gambling futures contracts. This did not last long as Kalshi and
other prediction market platforms became increasingly aggressive in
their marketing approach to sports gambling futures contracts. In
November 2025, Fanatics Sportsbook, FanDuel, and DraftKings resigned
membership in the American Gaming Association (``AGA'') because of a
desire to add sports prediction market gambling to their online
gambling products.\15\ Just one month later, all three online gambling
platforms added prediction market gambling making sports gambling
available in all fifty states and to anyone as young as eighteen.\16\
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\15\ Contessa Brewer, ``FanDuel, DraftKings abandon AGA trade group
as rift over sports prediction markets grows.'' CNBC, November 18,
2025. https://www.cnbc.com/2025/11/18/fanduel-draftkings-abandon-aga-
memberships.html
\16\ Tom Nightingale, ``FanDuel Predicts live in all 50 states,
adds sports in California and Texas.'' SBCAmericas, January 15, 2026.
https://sbcamericas.com/2026/01/15/fanduel-predicts-all-50-states/
---------------------------------------------------------------------------
To further support the aggressive move to add prediction market
gambling to their portfolio of online products, DraftKings, Fanatics,
and FanDuel joined BetMGM and Bet365 as members of the gambling
industry trade and lobbying group known as the Sports Betting Alliance
(SBA) to advocate for sports gambling, including prediction market
sports gambling, in all fifty states.\17\
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\17\ Sports Gambling Alliance, ``Mission Statement.'' https://
sportsbettingalliance.org/about/
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As of May 2026, prediction markets are offering a wide variety of
sports gambling contracts in every state. This now includes parlays
(``combos''), same-game parlays and numerous forms of micro betting.
During the recently completed 2025-26 football season, gambling on
sports contracts accounted for nearly 50 percent of all action on the
Kalshi platform.\18\ It is presently estimated by the gambling industry
that on a weekly basis nearly 80 percent of all action on the
prediction market platforms are sports gambling contracts.\19\
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\18\ Dan Bernstein, ``DraftKings, Flutter stocks fall amid Kalshi
parlay progress.'' Sportico, September 30, 2025. https://
www.sportico.com/business/sports-betting/2025/draftkings-flutter-stock-
kalshi-parlay-1234872516/
\19\ Ryan Butler, ``Prediction Market Volume Quadrupled in Past 2
Years, Report Finds.'' Covers, March 13, 2026. https://www.covers.com/
industry/prediction-market-volume-quadrupled-in-past-two-years-report-
finds-march-13-2026
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For the American public this amounts to a clear, convincing, and
unmistakable conclusion; prediction markets, including Kalshi,
Polymarket, DraftKings, FanDuel, and Fanatics have delivered online
sports gambling to all fifty states, and the product is now available
to youth starting at age eighteen.
There should be no doubt that sports prediction markets constitute
gambling. Accordingly, all future references to the gambling industry
herein include prediction markets.
Sports Gambling and Integrity of the Leagues--
This hearing is to examine among other issues, the impact of
gambling and prediction markets on the integrity of sports in America.
There can be no dispute; any business enterprise that gambling touches
inherently undermines its integrity. This is particularly true when the
business enterprise at issue is the American institution of
professional and collegiate sports. This is not merely my opinion. Heed
the words of National Football League (NFL) Commissioner Roger Goodell
from his sworn deposition testimony:
Q. And there you state that your most important responsibility
is maintaining the integrity of professional football and
preserving public confidence in the NFL. What threats are there
to the integrity of pro football in the United States?
A. Gambling would be number one on my list.\20\
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\20\ Deposition transcript R. Goodell, NCAA v Christie, UNITED
STATES DISTRICT COURT DISTRICT OF NEW JERSEY Civil Action No. 3: 12-cv-
04947-MAS-LHG
This was not an isolated statement from the NFL Commissioner. In a
subsequent affidavit filed, under oath and with penalty of perjury, the
Commissioner affirmed that relationships with gambling companies
severely damage the integrity and fabric of sports and irreparably harm
long-standing bonds and cultural experiences enjoyed by sports fans and
---------------------------------------------------------------------------
families:
The NFL cannot be compensated in damages for the harm that
sports gambling poses to the goodwill, character, and integrity
of NFL Football, and to the fundamental bonds of loyalty, and
devotion between fans and teams that the league seeks to
maintain. Once the character and integrity of NFL Football have
been compromised, and the bonds of loyalty and devotion between
fans and teams have been broken, NFL Football will have been
irreparably injured in a manner that cannot be calculated in
dollars (emphasis added).\21\
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\21\ Murphy v. National Collegiate Athletic Association, No. 16-
476, 584 U.S. 453 (2018).
Although I am quoting NFL Commissioner Goodell, the recognition
that gambling touching professional or collegiate sports inexorably
destroys the integrity of our treasured athletic institutions was
shared by the commissioners of every professional, collegiate, and
amateur sports organization. This was recently addressed in the context
of prediction markets by Alex Roth, Esq., assistant general counsel to
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the National Basketball Association:
The integrity risks posed by sports prediction markets are more
significant and more difficult to manage than those presented
by legal, regulated sports gambling,'' \22\
---------------------------------------------------------------------------
\22\ Roberts and Schiffer, ``NBA views prediction markets as the
same as sports betting.'' FrontOfficeSports, February 14, 2026. https:/
/frontofficesports.com/adam-silver-nba-sees-prediction-markets-same-as-
sports-betting/
The word ``integrity'' must remain at the epicenter of the
discussion when considering the urgent need for Federal oversight of
the sports gambling industry, including prediction markets.
Integrity is defined as ``the quality of being honest and having
strong moral principles that you refuse to change.'' \23\ Obviously,
the sports leagues failed the moral principles that you refuse to
change piece of the integrity test as the lure of taking fans' gambling
money quickly motivated every conceivable sports league, and the
National Collegiate Athletic Association (NCAA)to reverse long-standing
opposition to gambling and accepting billions in new revenue by
entering into previously unthinkable deals with the gambling industry
which have led to their direct involvement in creating gambling
products.
---------------------------------------------------------------------------
\23\ Cambridge Dictionary (2026). https://dictionary.cambridge.org/
us/dictionary/english/integrity
---------------------------------------------------------------------------
When it comes to the urgent need to protect people and families,
the lack of the leagues' moral principles is only a small part of the
integrity story. Far more dangerous is the lack of candor
systematically, repeatedly, and intentionally demonstrated by the
sports leagues and the NCAA regarding the scope of their relationships
with the gambling industry. This has resulted in the sports leagues and
NCAA becoming full partners in the gambling industry and unleashing an
entirely different, inherently dangerous, and more highly addictive
form of online gambling known as micro betting on the American public.
Micro betting, and its close cousins, ``prop bets'' and ``same game
parlays'' has enriched the leagues and the NCAA while simultaneously
causing a new American mental health and addiction crisis. While the
most at risk are teenagers and younger adults, the harm is quickly
metastasizing across all demographics.
To borrow an unfortunate phrase, the worst is yet to come. In
development, ready to launch, and financially backed by the NFL, is an
even faster and more lethal form of AI-driven micro betting
specifically designed to convert traditional fans into constant micro
bettors.\24\ Because the sports leagues, the NCAA, prediction markets,
and the online gambling companies have not been honest with the public
and policymakers; the development of this new and more dangerous form
of online gambling is rolling out without any Federal oversight. It is
magnifying the mental health crisis and must be addressed forthwith at
the Federal level.
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\24\ Matt Fleckenstein, ``One system. Endless solutions.'' Genius
Sports Investor Day/Genius IQ. https://www.youtube.com/
watch?v=L6ZWQImpYNw
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Thus, I shall devote much of my testimony to uncovering the truth
regarding the dangerous and somewhat clandestine financial
relationships between the gambling industry and the sports leagues,
including the NCAA. Once Congress and the American people have a clear
and accurate understanding of how the public is being targeted with a
known addictive product which is designed, engineered, and delivered by
the sports leagues in partnership with the gambling industry, there
will be an immediate and powerful call for Federal oversight, reform,
and comprehensive regulation of the gambling industry and its sports
and technology partners. We are in the early years of a new and fast-
growing mental health crisis caused by the newest and least understood
online sports gambling products. Lives and families are in the balance.
The time is now for Congress to exercise its lawful authority by
passing legislation to bring Federal safety standards to the online
sports gambling industry.
The Mental Health and Sports Integrity Crisis--
Let me be clear. I am not opposed to sports gambling. However, I am
vehemently opposed to and deeply concerned about what has transpired in
just eight years since the United States Supreme Court struck down the
Professional and Amateur Sports Protection Act (``PASPA'').\25\
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\25\ Murphy v. National Collegiate Athletic Association. 138 S. Ct.
1461 (2018).
---------------------------------------------------------------------------
The sports gambling industry has expanded beyond a single industry
to become the ``gambling establishment'' comprised of once unthinkable
business partnerships including gambling companies; prediction markets,
sports leagues, teams, owners, and athletes; the world's largest media
and technology companies; social media; the AI industry; and state
governments themselves.\26\ All are acting in concert to deliver online
gambling at light speed and to ensure that access to sports gambling
action never stops. This new and AI-fueled business model is resulting
in increased gambling addiction and gambling-related harm.
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\26\ Orford, J. (2017). The Gambling Establishment and the Exercise
of Power: A Commentary on Hancock and Smith. International Journal of
Mental Health and Addiction, 15(6), 1193 1196. https://doi.org/10.1007/
s11469-017-9781-8.
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Medical science has recognized for more than twelve (12) years that
gambling is a known addictive product, and gambling disorder is an
addiction similar in nature to heroin, opioids, tobacco, alcohol, and
cocaine (DSM-5, 2013). With every other addictive product or substance,
the Federal government regulates the advertising, promotion,
distribution, speed, and consumption of the product. This is to prevent
harm and protect the public from danger when an industry is marketing
and distributing an addictive and potentially dangerous product.
With gambling, the exact opposite is occurring. This is the core of
our new sports integrity nightmare. The sports leagues have further
embraced avarice by selling real-time data to the gambling industry to
create high intensity gambling products of a kind we have never seen
before. These data agreements enrich the leagues and serve as the blood
and oxygen supply for instant and non-stop micro betting. The gambling
industry and sports leagues have become partners to deliver constant
and non-stop gambling action on every phone, tablet, and computer.
Frighteningly, the gambling and prediction market companies, in concert
with the sports leagues and AI companies, are poised to launch an even
more destructive product with touch screen live micro betting. This
will permit 24-hour nonstop gambling on every conceivable micro event
by merely touching the screen of your phone, tablet, or use a mouse or
remote on your computer or television. It will usher in a world of non-
stop micro betting, at the speed of a slot machine, without ever
leaving your bed.
With the use of cutting-edge technology, incredible computing
power, artificial intelligence, and billion-dollar data partnerships,
the gambling industry and sports leagues are poised to turn every
electronic device into a 24/7 gambling machine in conscious disregard
of the mental health and addiction epidemic that will surely follow. In
the crosshairs of this impending epidemic are children and young adults
being victimized by the unrelenting power of technology and the
normalization of sports gambling. Without leaving our homes, each game,
contest, or match from every corner of the globe will deliver constant
access to highly addictive micro betting and non-stop gambling action.
The human brain is not built to handle constant and unrelenting
exposure to an addictive product. However, this is exactly what the
gambling companies and sports leagues have developed and are prepared
to launch on the American public.\27\
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\27\ Nick Watt, ``How the NFL is betting big on gambling.'' CNN's
The Lead with Jack Tapper, March 29, 2026. https://www.cnn.com/2026/03/
19/business/video/gambling-sports-betting-nfl-genius-lead-jake-tapper
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The chasing of action and/or losses is a crucial part of the
diagnostic criteria for gambling addiction.\28\ From my on clinical
experience, I have found that chasing action is also the symptom most
closely related to suffering harm. Chasing action is something I see
every day I meet with clients and families suffering the most dire and
devastating effects of gambling and gambling addiction. The effects I
see every day in my clinical work as a therapist include financial
ruin, desperation, suicidal ideation, depression, anxiety, career loss,
divorce/separation, criminal behavior, homelessness, cooccurring
alcohol and substance disorders, and deep despair. With online sports
gambling, delivering constant action for users to chase is an inherent
part of the gambling industry and sports leagues' business model. It is
exactly what online sports gambling is designed to deliver, and it is,
tragically, ruining the lives of many people and countless families.
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\28\ Rennert, L., Denis, C., Peer, K., Lynch, K. G., Gelernter, J.,
& Kranzler, H. R. (2014). DSM-5 gambling disorder: Prevalence and
characteristics in a substance use disorder sample. Experimental and
Clinical Psychopharmacology, 22(1), 50-56. https://doi.org/10.1037/
a0034518.
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Inducing younger and more vulnerable people to become addicted to
gambling has become part of the gambling and sports industry business
model. The leading AI company in this space is Genius Sports. One of
the largest equity shareholders in Genius is the National Football
League and its 32 team owners. In partnership with the NFL, Genius
Sports has developed BetVision; an interactive touchscreen betting
platform installed in streaming services. The stated purpose of
BetVision is to deliver a seamless real-time non-stop micro betting
platform where merely touching the screen will permit gambling on the
actions of every player. BetVision tracks the tendencies of each
individual gambler and provides overwhelming personal data to the
gambling companies for the stated purpose of targeting people with
individually crafted gambling products and promotions.\29\
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\29\ Matt Fleckenstein, ``FIVE insights from our CPO: Why BetVision
is the future of in-play.'' Genius Sports, September 8, 2025. The SPO
stated: ``By leveraging user behaviour and a smart understanding of the
live match state, BetVision populates relevant betting markets and
statistics to help users decide on their next bet and track the
progress of ongoing ones.'' https://www.geniussports.com/content-hub/
betvision-future-of-live-betting/
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The NFL and Genius Sports describe the goal of BetVision as an
immersive intelligent interactive tool to convert traditional fans into
high engagement in-play bettors . . . which are significantly more
profitable for Genius and for our sportsbook partners.\30\ The
dangerous and intentional lack of candor does not stop with the NFL
investing in BetVision. Under the guidance of Commissioner Goodell, the
NFL recently sold all of its streaming content services to Disney. In
exchange, the NFL received a 10 percent ownership of ESPN.\31\ The
strategy underlying this new partnership with Disney/ESPN is to deliver
sports gambling featuring BetVision through streaming services such as
ESPN Plus. Thus, the NFL and Genius Sports have developed the
technology to seamlessly deliver non-stop micro betting and prediction
markets with the aim of converting even casual fans into constant in-
game gamblers.
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\30\ See supra note 24.
\31\ The Walt Disney Company, ``ESPN to Acquire NFL Network and
Other Media Assets from the NFL in Exchange for a 10 percent Equity
Stake in ESPN.'' August 5, 2025. https://thewaltdisneycompany.com/news/
espn-nfl-agreement/
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The notion that our sports leagues and the gambling industry are
openly seeking to convert fans into high engagement micro bettors is
alarming. On its face, it resembles the villainous plot of a movie. But
this is really happening right now: The design and delivery of a
dangerous and addictive product for the purpose of wildly enriching a
powerful syndicate while knowingly inflicting untoward harm on society.
The inclusion of prediction markets in the gambling industry
syndicate takes the risk of an addiction epidemic to ever more
destructive levels. Prediction markets, by labeling their sports
gambling product as ``investment products'' are presently seeking to
act in total disregard of state laws governing gambling. This means
that gambling consumer protection laws enacted by states to protect the
public are disregarded by the prediction markets.
This rejection of state consumer protections and the concurrent
expansion of prediction market gambling to teenagers and adults in all
fifty states represents a significant expansion by the sports leagues
into the gambling industry. In October 2025, the National Hockey League
(NHL) struck a massive deal with Kalshi and Polymarket to sell real
time and historical data to fuel the advancement of micro betting,
parlays, and same-game parlays on prediction market platforms.\32\ The
NHL is not alone in striking prediction market data deals.
---------------------------------------------------------------------------
\32\ Bill King, ``How the NHL got comfortable with prediction
markets.'' Sports Business Journal, October 27, 2025. https://
www.sportsbusinessjournal.com/Articles/2025/10/27/how-the-nhl-got-
comfortable-with-prediction-markets/
---------------------------------------------------------------------------
In March 2026, Major League Baseball signed an ``exclusive data
deal'' with offshore prediction market gambling company Polymarket.\33\
Additional sports gambling data deals with prediction market companies
have been signed by Major League Soccer, and the Ultimate Fighting
Championship (UFC).\34\ The National Basketball Association (NBA) is in
the final stage of talks to sell its data to the prediction market
industry.\35\ The NFL claims a neutral position on prediction markets
data deals. Meanwhile the league financially benefits from prediction
markets because of its ownership stake in Genius Sports; a company
aggressively engaged with prediction market companies as business
clients.\36\ These complex and lucrative data deals have now resulted
in the introduction of Polymarket ``bonus bet'' offers for sports
gambling including MLB and the NBA.\37\
---------------------------------------------------------------------------
\33\ Ben Horney, ``MLB makes multiyear prediction-market deal with
Polymarket.'' March 19, 2026. https://frontofficesports.com/mlb-makes-
multiyear-prediction-markets-deal-with-polymar-
ket/
\34\ Id.
\35\ Ben Horney, ``NBA is in talks with Kalshi and Polymarket.''
Front Office Sports, April 16, 2026. https://frontofficesports.com/nba-
is-in-talks-with-kalshi-and-polymarket/
\36\ Jack Davidson, ``Betting Overview & Prediction Markets
Update.'' Genius Sports, January 2026. https://www.youtube.com/
watch?v=0XFP_bTNdFA; Genius Sports Investor Day ``Panel Discussion with
Mark Lockem Roger Godell, and Steve Bornstein.'' January, 2026. https:/
/www.youtube.com/watch?v=AP3gJ0_UWcw
\37\ Michael O'Nair, ``Polymarket Promo Code STREET: Get upgraded
$50 bonus for MLB, PGA, NBA playoffs.'' Russell Street Report, May 14,
2026. https://russellstreetreport.com/2026/05/14/sports-betting/
polymarket-promo-code-street-get-upgraded-50-bonus-for-mlb-pga-nba-
playoffs/
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The expansion of prediction market gambling to include financial
partnerships with the most powerful sports leagues has dramatically
increased the risk of addiction specifically with young men. Prediction
markets are structured in ways that encourage continuous, and
potentially addictive, engagement. While presented as a financial
exchange in which users ``trade'' on future events, the prediction
market design actively encourages patterns of use associated with
gambling addiction. Most notably, they include features that reinforce
repeated use through rapid feedback and constant stimulation. As one
commentator explains ``the platforms demonstrate sophisticated
understanding of sensation-seeking behavior in their design. For
instance, real-time price movements, instant feedback mechanisms, and
celebration pop-ups create a constant stream of novel stimuli that can
trigger dopamine responses.'' \38\
---------------------------------------------------------------------------
\38\ Sharon Rabinovitz & Nizan G. Packin, All Bets Are On:
Addiction, Prediction, Regulation, and the Future of Financial
Gambling, 36 Fordham Intellectual Prop., Media, Entm't L. J. 147
(2025).
---------------------------------------------------------------------------
The prediction market then packages this action as a form of
investment rather than gambling to circumvent state regulatory
requirements for gambling operators. This is intended not only to avoid
state regulation, but also to attract an ever more vulnerable group of
gamblers to participate in the action. States historically set twenty-
one as the minimum legal age for gambling. The prediction markets
ignore this public safety law and openly tout their gambling product as
available to anyone eighteen or older.
Next, states with legalized sports gambling will typically mandate
self-exclusion programs as part of the package of consumer protection
laws. The prediction markets turn a blind eye to self-exclusion
programs and readily welcome all takers, including those battling to
overcome gambling addiction. The labeling of prediction markets as an
investment rather than gambling is another predatory tactic designed to
attract the most vulnerable users to these platforms. It is not
difficult to imagine how people struggling with a gambling problem
would be drawn to prediction markets under the false premise that they
are not gambling but merely investing. Ignoring the basic form of
safety enhancement by pretending that prediction markets are not
gambling is not only self-serving, but vile and predatory. Yet it is
being openly encouraged by prediction market operators.
Only forty states have legalized sports gambling. For a variety of
reasons, the people in the other ten states have chosen to reject
sports gambling. However, the prediction markets, including Kalshi,
Polymarket, DraftKings, FanDuel, and Fanatics disregard the will of the
people in these ten states and are delivering sports gambling in open
defiance of the law and the public good. We are literally witnessing
this segment of the gambling industry acting as though it is entirely
above the law. This defiance of the law extends to taxation. The
prediction markets have unilaterally decided that state laws do not
apply to their gambling products.
Thus, in addition to rejecting state consumer protection
regulations, these companies refuse to pay state taxes on the enormous
profits they generated by prediction market gambling. Yet, the economic
and mental health consequences and costs are experienced in the states.
This brings us back to the crucial issue of integrity of the sports
leagues. This is not an issue of whether the public can trust the
outcome of any particular game. The moment the leagues decided to
embrace and accept gambling money, they inexorably called into question
the sanctity of their sports and the joy of athletic competition. This
was a conscious and deliberate decision on the part of the leagues: to
forsake their historical value to society for the ability to extract
more money from their fans' bank accounts to their bottom lines. What
the leagues presently attempt to casually portray as ``fan engagement''
is a calculated effort to chase the revenue offered by data deals with
gambling and prediction market operators. Sports once belonged to the
American public. Sports has, for centuries, belonged to American
families and shared by grandparents, parents, children, and sibling.
Those days are gone. Sports have sold their soul to the gambling
industry by choosing to become the equivalent of a non-stop slot
machine.
Thus, whether the American public can still trust and value the
truth, morality, and wholesomeness of athletic competition is a
decision each of us will make for ourselves. Such is the bed the sports
leagues have created. Claims that the leagues are poised to police
themselves are not sufficient.
As for the self-serving claim that the leagues must sell their data
to gambling operators in order to ensure self-surveillance and protect
the integrity of the game, this is beyond insulting to the public and
our elected leaders. One need look no further than the plethora of
professional and collegiate scandals over the last 18 months to see the
overwhelming evidence that the new world order of in-game micro betting
has resulted in far too many compromised moments. Companies such as IC-
360 (a presenter during this hearing) will proclaim that it monitors
each game and contest for signs of irregularity with betting patterns.
Considering the still mounting number of alleged cheating scandals in
the past year that it failed to prevent, with all due respect, this is
not the answer.
What must be acknowledged are the American lives put at risk by
these alleged cheating scandals. It should be noted that each of the
people accused are innocent until proven guilty. Thus far, every
cheating scandal involves micro betting, and this is not surprising.
Micro betting is an entirely new and inherently dangerous gambling
product which permits action every 10 seconds or faster. The
opportunities for gambling to taint and tarnish sports have grown to
countless numbers and many of the scandals involve student athletes
under the age of twenty-one. The leagues and the NCAA have created this
problem. The people getting caught in the trap are increasingly younger
and often student-athletes. The leagues and the NCAA designed this
model in partnership with the gambling industry. For the leagues to now
claim they need to protect their image is disingenuous and problematic.
It bears noting that the NCAA is complicit and equally lacking
integrity when it comes to truth and candor. Previously, the
Commissioner of the NCAA, Governor Charlie Baker came before the Senate
Judiciary Committee purporting to request help reining in proposition
bets on college sports.\39\ However, at the very same time, and
unannounced to the Judiciary Committee, the NCAA was involved in
negotiations with Genius Sports to sell college sports data to gambling
operators to further fuel micro betting. On April 25, 2025, the NCAA,
quietly, with a late Friday press release, announced a lucrative data
deal with Genius Sports.\40\ This somewhat unthinkable gambling
partnership was met with condemnation.\41\ However, without notifying
Congress, or any other governing body, the NCAA and its gambling
partners now accept wagers on each shot in our beloved March Madness
basketball tournaments.
---------------------------------------------------------------------------
\39\ Becky Sullivan, ``The president of the NCAA calls for a ban on
'prop bets' in college sports.'' NPR, December 17, 2024. https://
www.npr.org/2024/12/17/nx-s1-5231991/ncaa-charlie-baker-sports-
gambling-regulations-senate
\40\ Genius Sports, ``NCAA and Genius Sports expand partnership
through 2032.'' April 25, 2025. https://www.geniussports.com/newsroom/
ncaa-and-genius-sports-expand-partnership-through-2032/
\41\ Public Health Advocacy Institute, ``Public Health Advocacy
Institute response to NCAA decision to sell gambling data to
sportsbooks.'' April 28, 2025. https://www.prnewswire.com/news-
releases/public-health-advocacy-institute-response-to-ncaa-decision-to-
sell-gambling-data-to-sportsbooks-302440104.html
---------------------------------------------------------------------------
Descriptions of the hypocritical complicity of the leagues could
continue with little end in sight. The height of hypocrisy was
demonstrated by major league baseball in the wake of the 2025 micro
betting scandal regarding two Cleveland Guardian pitchers. As the
Committee will recall, two Guardian pitchers stand accused of fixing
pitches to enable partners to profit from micro bets on the speed and
accuracy of each pitch.\42\ In the immediate aftermath of these
allegations, MLB acted quickly; not to protect the public but to guard
its lucrative data deals with the gambling industry. MLB Commissioner
Rob Manfred announced a $200.00 per pitch limit on such wagers. A
review of this decision by Commissioner Manfred reveals its true intent
is to protect the value of MLB's relationship with the gambling
industry.
---------------------------------------------------------------------------
\42\ U.S. Attorney's Office EDNY, ``Two current major league
baseball players charged in sports betting and money laundering
conspiracy.'' November 9, 2025. https://www.justice.gov/usao-edny/pr/
two-current-major-league-baseball-players-charged-sports-betting-and-
money-laundering
---------------------------------------------------------------------------
Consider, for example; there are approximately 20 pitches each half
inning, or 40 per inning and 360 each game. With fifteen games most
nights, people can now wager and lose only $72,0000 a game and
$1,080,000.00 per night all season on micro betting on each pitch. Yes,
MLB acted swiftly. Not to protect the integrity of the game, however,
but to guard its lucrative data deals with the gambling industry.
The Call for Federal Regulation--
On May 24, 2018, the United States Supreme Court struck down the
Professional and Amateur Sports Protection Act (PASPA). This cleared
the way for states to legalize online sports gambling. In just eight
years, thirty-nine states and the District of Columbia have done so.
Of critical importance, The Murphy Court specifically noted that
Congress retains the legal authority to regulate online sports
gambling:
The legalization of sports gambling is a controversial subject.
Supporters argue that legalization will produce revenue for the
States and critically weaken illegal sports betting operations,
which are often run by organized crime. Opponents contend that
legalizing sports gambling will hook the young on gambling,
encourage people of modest means to squander their savings and
earnings, and corrupt professional and college sports. The
legalization of sports gambling requires an important policy
choice, but the choice is not ours to make. Congress can
regulate sports gambling directly, but if it elects not to do
so, each State is free to act on its own (Murphy v NCAA, 2018)
(emphasis added).
In aggressively marketing and promoting sports gambling through
broadcast advertising, internet ads, social media, in-app
notifications, and steering viewers toward certain gambling products
during the broadcast of games, our relationship with sports has shifted
to a relationship with gambling. Equally dangerous is the gambling
industry use of ``VIP hosts'' where the gambling companies target and
reward people for increasing their gambling action. VIP hosts use a
wide array of incentives and induce people to keep gambling. These
often include tickets, gifts, trips, cash bonuses, restaurant meals and
more. This is akin to a drug dealer rewarding the best ``customers'' to
make certain they never stop needing or wanting action. VIP hosts
presently operate without any Federal scrutiny, and this gambling
industry tactic warrants its own Senate hearing.
The gambling industry and its sports partners have taken sports
away from children, families, and the American public. Gambling takes
place on every micro-event within sporting events, from the speed of
the next baseball pitch to every football snap, basketball shot, tennis
serve, and even ping pong points from Russia and Eastern Europe. Live
sports for gambling happen around the globe and around the clock so
that the action never stops. Sports have sadly become the equivalent of
a non-stop slot machine.
How did we get here and why is it essential that Congress act to
regulate gambling, including prediction markets, as an issue of
public health?
There are two answers to this question.
First, online sports gambling is a fundamentally different and more
dangerous gambling product than anyone could have anticipated. In May
2018, when the Supreme Court decided Murphy v NCAA, no one could have
foreseen what online sports gambling would quickly become.
On June 14, 2018, Governor Phil Murphy made the first post-Murphy
bet. He placed $20 on the New Jersey Devils to win the 2019 Stanley
Cup. This was a bet that would take 11 months to decide.
Now, just eight years later, online sports gambling brings action
every 11 seconds, or faster. With the use of AI, online sports gambling
takes place at light speed, and this goes on nearly 24 hours a day,
every day. The human brain is not built to handle such stimulation from
the rapid consumption of a known addictive product. This is
particularly problematic with younger adults as the risk/reward system
of the brain is not fully developed until age 26.\43\
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\43\ Arain M, Haque M, Johal L, Mathur P, Nel W, Rais A, Sandhu R,
Sharma S. Maturation of the adolescent brain. Neuropsychiatr Dis Treat.
2013;9:449-61. doi: 10.2147/NDT.S39776. Epub 2013 Apr 3. PMID:
23579318; PMCID: PMC3621648.
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Fast approaching is the pending rollout of BetVision and the NFL
investment in Disney and ESPN resulting in the likely launch of a non-
stop micro betting streaming service.\44\ This is more like a dystopian
science fiction story than recreational sports gambling. It certainly
was not what the Majority in Murphy or anyone had in mind when the case
was decided on Tenth Amendment principles.
---------------------------------------------------------------------------
\44\ See supra note 31.
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The second answer to how we arrived at this dangerous juncture with
online sports gambling is the old adage, follow the money.
The sports leagues, teams, owners, and players have entered into
previously unthinkable partnerships with the gambling industry. They
sell their real-time data statistics to the gambling industry for
billions of dollars. This takes place with every sport from baseball,
football, and basketball to soccer, tennis, golf, hockey, auto racing
and more.
The gambling companies, now including prediction markets, then turn
these statistics into constant gambling action. Micro bets, same game
parlays, player props, profit boosts, rapidly changing in-game odds and
point spreads, and much more. These are AI-driven gambling products
which target people with the most addictive forms of gambling action.
Meanwhile, the gambling industry admonishes the public to ``bet
responsibly'' and calls this industry driven hypocritical approach, the
``responsible gaming'' (RG) model.
Follow the money. The gambling industry is paying its sports and
media partners billions of dollars to obtain statistics, advertise,
create, and distribute online gambling products. Unlike any other
business in this country, no tangible products are sold or distributed.
The gambling industry is not selling any widgets on the market. The
only way for the gambling industry to recoup its massive spending and
generate revenue is to induce the public to chase faster and faster
gambling action and lose more money more quickly than ever before.
There is no dispute that keeping people in action is, fundamentally,
the gambling industry business model.
Chasing action is also the clearest symptom of gambling addiction
and gambling-related harm. Thus, the industry's business model is
designed to cause harm by prompting the public to engage in constant
action with ever more risky gambling activities.
Meanwhile, the gambling industry contends that less than one
percent of gamblers are suffering from a gambling addiction and less
than five percent are at-risk for problem gambling. In fact, The
President of the American Gaming Association (``AGA'') told CBS' 60-
Minutes in 2024 that the gambling industry rejects the notion that
online gambling is addictive:
``. . . I don't believe that there is an addiction to mobile
betting any more than there is an addiction to utilization of
your phone for any other reason,'' \45\
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\45\ Wortheim et al., ``Young gamblers place sports bets while
showering, wager away student loan money, addiction therapist warns.''
CBS News, February 4, 2024. https://www.cbsnews.
com/news/young-gamblers-sports-betting-addiction-60-minutes/
Notwithstanding the reticence of the AGA to recognize the science
related to gambling addiction, there is a burgeoning international
movement to consider the unprecedented expansion of the online sports
gambling industry as a significant threat to mental health The evidence
is everywhere that we are in the early stages of a mental health and
gambling addiction epidemic and those most severely impacted are young
men. This brings the focus squarely to the dangerous conduct of the
prediction markets and a business model that attempts to deliver non-
stop gambling to people as young as eighteen.
A March 2026 national survey found that nearly two-thirds (65
percent) of American adults report having gambled before the age of
21.10 Online gambling particularly afflicts young men, as a Fairleigh
Dickinson University study found that 25 percent of men aged 30 and
under wager on sports digitally, and that 10 percent admit to a
gambling problem. These are not just statistics. These are young people
whose relationships with their friends, families, and communities have
been disrupted by their engagement with these platforms.\46\
---------------------------------------------------------------------------
\46\ Fairleigh Dickinson University, ``FDU Poll finds Online
Betting Leads to Problems for Young Men,'' September 19, 2024, https://
www.fdu.edu/news/fdu-poll-finds-online-betting-leads-to-problems-for-
young-men/.
---------------------------------------------------------------------------
A high percentage of calls to gambling helplines are coming from
younger adults fixated on the fast-paced action of in-game micro sports
betting. As recently stated by Felicia Grondin, the executive director
of the Council On Compulsive Gambling of New Jersey, ``People don't
really have the time to collect their thoughts to say, `Do I really
need to place this wager?' They get involved in the game. There's a
dopamine rush, they're excited and before you know it, they're tens of
thousands of dollars in debt . . .'' \47\
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\47\ Bobby Brier, ``Surge in problem gambling in NJ--and in calls
for help.'' New Jersey Education Association, September 26, 2024.
https://www.njspotlightnews.org/2024/09/problem-gambling-surges-in-new-
jersey-more-young-men-call-helpline-sports-betting/
---------------------------------------------------------------------------
The gambling industry itself is strongly opposed to the Federal
government regulating gambling. The official position of the American
Gaming Association is ``The AGA firmly believes additional Federal
regulatory oversight of legal sports betting is unwarranted. States and
tribal nations have proven to be effective regulators of gaming--
including sports betting--and the more than 4,000 regulators nationwide
have decades of experience overseeing gaming operations within their
jurisdictions.'' \48\ The recently created Sports Betting Alliance
(SBA) comprised of Bet365, BetMGM, DraftKings, Fanatics, and FanDuel
also strongly opposes any form of regulation of micro betting.\49\
---------------------------------------------------------------------------
\48\ William C. Miller, Jr., Memo to Members of the 117th United
States Congress Dated January 28, 2021. https://www.americangaming.org/
wp-content/uploads/2021/01/Letter-to-the-Hill-Jan-2021.pdf
\49\ Robert Linnehan, ``New Jersey lawmakers, regulators consider
micro betting ban bill.'' SportsBettingDime News, December 16, 2025.
https://sportsbettingalliance.org/
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The AGA and SBA contend, without empirical evidence or data, that
gambling addiction and gambling-related harm are de minimis problems in
society. The industry publicly states that only 1 percent of the U.S.
gambling population shows addictive behavior regarding the wagers they
place.\50\ This frames the gambling industry's position that any mental
health or financial struggles with gambling should be focused on the
shortcomings of their customers and not the addictive nature or
predatory marketing of their gambling products. Thus, the gambling
industry continues to follow the same ``blame the customer'' playbook
perfected by Big Tobacco and seeks to place the onus on individual
users by advancing an industry-driven responsible gaming policy. This
is intentionally and unethically intended to distract and mislead the
Federal government to discourage it from regulating online sports
gambling to help make gambling products safer for consumers.
---------------------------------------------------------------------------
\50\ Devin O'Connor, ``American Gaming Association: 90 percent of
casino gamblers play responsibly.'' Casino.org, February 14, 2019.
https://www.casino.org/news/american-gaming-association-90-percent-of-
gamblers-play-responsibly/
---------------------------------------------------------------------------
The Responsible Gaming Model is Fatally Flawed--
Historically, gambling disorder was treated as a problem of
individual responsibility with emphasis placed on people already
suffering from gambling-related harm. This model is supported by the
gambling industry and is designed to focus on treating individuals
diagnosed with gambling disorder while urging the public to exercise
personal responsibility when gambling. At the core of this approach has
been the gambling industry-sponsored narrative that harm is suffered by
only a small percentage of ``problem gamblers'' and they should receive
treatment funded by gambling industry revenue. This is the model used
in every state that has introduced online gambling. It is the moral
equivalent of permitting Big Tobacco free reign to do whatever it wants
so long as it pays for chemotherapy and hospice.
This gambling industry-driven perspective is often called the
``responsible gaming'' (``RG'') model and rejects the concept that
online sports gambling causes societal harm. The gambling industry
wrongly contends that online sports gambling causes no net societal
harm, and there is no need for a public health approach focused on
preventing harm. Policy makers are then urged to eschew the notion that
public harm must be prevented by regulating the distribution and
marketing of gambling products. This again draws parallels to tobacco
where for decades the industry denied that tobacco and nicotine are
addictive and cause disease while simultaneously seeking to avoid any
public health regulation.
The RG model advanced by the industry is based on an incorrect
theory that only a small percentage of people are suffering harm from
gambling and gambling addiction, and a tiny fraction of gambling
revenue would be sufficient to pay for treatment of those who suffer
harm. The RG approach to industry self-regulation has come under
increased criticism for lacking empirical evidence. It is also roundly
criticized for minimizing the scope of public harm by focusing only on
people struggling with gambling addiction and failing to consider the
pain, damage and harm inflicted on impacted others including family and
friends of the persons suffering with gambling addiction.
Further, the RG approach is ethically flawed because it was paid
for and created by the gambling industry with the specific purpose of
avoiding government regulation.\51\ With every other disease and
condition the overwhelming emphasis is placed on prevention. With
gambling addiction, the industry invokes the RG model and rejects calls
for Federal regulation designed to prevent harm by claiming that the
gambling industry should be permitted to police and regulate itself.
---------------------------------------------------------------------------
\51\ Hancock, L., Smith, G. Replacing the Reno Model with a Robust
Public Health Approach to ``Responsible Gambling'': Hancock and Smith's
Response to Commentaries on Our Original Reno Model Critique. Int J
Ment Health Addiction 15, 1209-1220 (2017). https://doi.org/10.1007/
s11469-017-9836-x.
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The time has come for the Federal government to reject the abject
failure of the industry-driven RG approach and endorse an effort to
meaningfully regulate the online sports gambling industry as an urgent
public health concern. One would like to think that the gambling
industry and its establishment business partners would welcome efforts
by the Federal government to design and implement rules and regulations
to protect the betting public across the board in a way that provides
an even playing field. However, the mere mention of Federal regulation
causes a strong reaction in opposition from the industry. This fact
alone is, to borrow a gambling term, a ``tell'' and suggests the need
for Congress to become more actively involved.
The Time to Act is Now--
Notwithstanding efforts by the gambling industry to protect its
financial stranglehold and avoid Federal regulation, the words of the
Murphy Court endorsing the right of Congress to regulate online sports
gambling serve as a call for the Federal government to embrace the
legal, ethical, and moral obligation to prioritize the mental health of
Americans over gambling industry revenue (which is comprised solely
from the public's losses). It is the duty of Congress and the Federal
government to act and protect the mental health of all Americans
because the evidence of a looming crisis is undeniable.
The first waves of independent research examining the societal
damage related to online sports gambling in the United States are just
becoming available. In May 2023, the National Collegiate Athletic
Association (``NCAA'') released an alarming study examining online
sports gambling on college campuses.\52\ The disturbing findings
include:
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\52\ Key Findings from the NCAA Sports Betting Activities Survey,
April; 2023 are avail-
able at: https://ncaaorg.s3.amazonaws.com/research/wagering/
Apr2023NCAA_WageringKey
Findings.pdf
Sports wagering is pervasive among college students with 58
---------------------------------------------------------------------------
percent of 18-22-year-olds engaging in sports gambling.
Sports Gambling is widespread on college campuses with 67
percent of students betting on sports. Students living on or
near campus gamble at higher frequencies.
Nearly 60 percent of students are likely to bet on sports
after seeing a gambling advertisement.
More than 60 percent of students engaged in gambling are
betting on sports using the highly addictive ``in game/micro
bets''.
Nearly 80 percent indicate that betting on sports makes it
more likely they will watch the event on television or
streaming.
60 percent of student gamblers believe they can and will
make money betting on sports.
There were also two important online gambling studies released in
July 2024. The first is from researchers at UCLA Anderson School of
Management and the University of Southern California and the other is
from researchers at Northwestern University.\53\ \54\
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\53\ Hollenbeck, B., Larsen, P., & Proserpio, D. (2024). The
financial consequences of legalized sports gambling. Available at SSRN.
\54\ Baker, S. R., Balthrop, J., Johnson, M. J., Kotter, J. D., &
Pisciotta, K. (2024). Gambling away stability: Sports betting's impact
on vulnerable households (No. w33108). National Bureau of Economic
Research.
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The UCLA/USC and Northwestern are separate and independent studies
but reveal strikingly similar and alarming findings particularly in
financially vulnerable communities and this includes a nearly 30
percent increase in bankruptcy filings in states with online sports
gambling.
The UCLA/USC researchers concluded:
The legalization of sports gambling decreased consumer
financial health. These results seem to be particularly
pronounced when states legalize online betting, suggesting that
the ease of access to gambling increases the problems
associated with it. Moreover, we find that young men,
particularly those in low-income counties, are most affected.
It must also be recognized that gambling addiction and gambling-
related harm causes damages far in excess of mere financial losses.
There is a direct causal connection between gambling addiction and
societal harms which include:\55\
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\55\ Wardle, H., Degenhardt, L., Marionneau, V., Reith, G.,
Livingstone, C., Sparrow, M., . . . & Saxena, S. (2024). The lancet
public health commission on gambling. The Lancet Public Health, 9(11),
e950-e994.
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Anxiety, Depression, Isolation
Loss of Job/Career
Cooccurring alcohol and drug disorders
Family violence
Homelessness
Criminality
Psychological distress
Comorbidities with substance misuse
Suicide
Federal regulation will expose and replace the dangerously flawed
RG system of industry self-regulation with a set of policies that will
help to prevent most harm from happening in the first place. RG places
the onus on the individual rather than regulating the addictive nature
of online sports gambling and predatory conduct of the industry. This
failure of the RG model must be replaced with a comprehensive response
at the Federal level, and, obviously, this. must begin with
Congressional action. This hearing is another significant step forward
toward Congress enacting meaningful safety standard to address and
prevent the mental health crisis related to gambling addiction.
Personal and Professional Background--
I hold a master's degree in professional clinical counseling from
La Salle University, a doctorate in Law and Public Policy from
Northeastern University, and a juris doctorate from Temple University
School of Law. My doctorate research focuses on policies required to
prevent gambling addiction and gambling-related harm.
Professionally, I serve dual roles as Director of Gambling Policy
with the Public Health Advocacy Institute (PHAI) at Northeastern
University School of Law and as an internationally certified gambling
addiction counselor. This permits me to clinically treat patients and
families suffering with gambling addiction while simultaneously working
as a policy expert and advocate. Simply put, prevention of gambling
addiction is the single best form of treatment.
Given my background and qualifications, I am duty bound to utilize
the totality of my professional training and personal experience to
help lead the movement for regulation and reform with the goal of
preventing gambling addiction and gambling-related harm.
In addition to being a gambling addiction therapist and Director of
Gambling Policy with PHAI, I am also a gambling addict in recovery. I
made my last bet on April 27, 2014, and on that same night, I nearly
took my own life in a suicide attempt. With gambling addiction, the
risk of suicide is omnipresent. Research shows that one in every two
people suffering with gambling addiction will contemplate suicide and
one in five will make an attempt.\56\
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\56\ Wardle, H., Reith, G., Langham, E., & Rogers, R. D. (2019).
Gambling and public health: we need policy action to prevent harm.
British Medical Journal, 365.
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In the grips of my gambling addiction, I devastatingly hurt many
people who had loved and trusted me. This included clients, friends, my
children, and the people who were closest to me. Personal carnage
related to gambling addiction destroys the most trusted and intimate
relationships, sometimes beyond repair.
Gambling addiction took my mind, soul, body, and conscience. It
left me broken, battered, and homeless. I was unrecognizable to myself.
The only thing I had left was my name.
On February 15, 2015, I stood in a courtroom in Philadelphia,
Pennsylvania. This was a court where I practiced law for more than two
decades and where my father had practiced for more than half a century.
In the presence of the court, the clients I had betrayed, and my
children, I pled guilty to financial crimes committed in the throes of
my gambling addiction. On that day, I pledged, under oath to the court,
that if I could get well and find recovery, I would give back by doing
everything in my power to prevent others from suffering harm related to
gambling addiction. I continue this mission by serving as Director of
Gambling Policy with PHAI and as a therapist working with people and
families battling to overcome gambling addiction.
As a therapist, I adhere to the ethical principle of beneficence.
As such, it is my duty to advocate in the best interests of my
patients, their families, and for the good of society. It is in this
realm that I fight for regulation designed to prevent gambling
addiction and gambling-related harm. Prevention is the best form of
treatment. Our Congress can lead the movement to protect families and
prevent this mental health and gambling addiction epidemic.
Thank you for granting me the opportunity to address this
distinguished Committee. I hope this is just the beginning of a more
comprehensive and ongoing dialogue.
Respectfully,
Dr. Harry Levant, MA, PCC, ICGC-I,
Director of Gambling Policy,
Public Health Advocacy Institute.
Senator Blackburn. And thank you. And I don't think anyone
would have made a bet that we would have had 5 witnesses who
stuck to 5 minutes. I congratulate you all.
[Laughter.]
Senator Blackburn. You're recognized, Chairman Cruz.
STATEMENT OF HON. TED CRUZ,
U.S. SENATOR FROM TEXAS
The Chairman. Well, I think that bet may have been on the
prediction markets. Good morning.
Americans love sports. Nearly 70 percent of Americans--
that's about 232 million people--consider themselves sports
fans. I am certainly one of them. I'm a sports fan for the same
reason everyone else is. Sports showcase human talent and grit
and drive. They put us on the edge of our seats as we wait and,
and hope for the thrill of the next big play, the come-from-
behind win.
From high school football, which is a religion in the great
state of Texas, to college basketball, to the professional
leagues, sports unite us at a time when it seems everything
else divides us. Today, many sports fans are also sports
bettors. 39 states and the District of Columbia have legalized
some form of sports betting, though my home state of Texas has
not.
Even in those states where sports betting is legal,
everyone agrees that it carries risks, and serious risks. It
should be regulated, and it should be done, if at all, in
moderation. This hearing is not about rolling back legalized
gambling in states that have chosen to authorize it. There are
two different questions instead before us at this hearing.
First, in a world where sports betting exists, how do we
preserve the integrity and authenticity of the sports that we
love? And second, are prediction markets operating within the
law, or are they defying the law and improperly infringing on
State sovereignty?
On the first question, integrity is the foundation of
sports. We want athletes competing on merit. But the
opportunity to make money can tempt gamblers, and sometimes
even athletes themselves, to guarantee a sure bet. Consider a
few recent cases. NBA players and coaches are accused of
manipulating performance and providing insider information to
win bets. Two, Major League Baseball pitchers allegedly rigged
their own pitches in exchange for money. MLS banned two players
for intentionally getting yellow cards to win bets. And the UFC
has canceled matches and terminated contracts because of
suspected match fixing.
These incidents sow doubt in the minds of fans. It is not
uncommon for fans scrolling Twitter on a Sunday afternoon in
the fall to see posts speculating that a controversial call by
an official was related to gambling. That is why sports leagues
and casinos and regulators have to work together to identify,
to investigate, and to root out manipulation. Fans need to be
assured that game rigging is rare and that anyone caught doing
it will be punished harshly, if not banned forever from the
game.
They're also grappling with a newcomer to the sports
integrity matrix: prediction markets like Polymarket and
Kalshi. Prediction markets have started offering, ``event
contracts on sporting events,'' which for all intents and
purposes are sports bets. Now, of course, there are real and
serious questions about the legal propriety.
At a minimum, any prediction market that offers event
contracts on sports should be expected to join serious efforts
to detect and prevent the rigging of sports. We must also
acknowledge the existence of unregulated offshore sportsbooks
that have existed for decades. That issue may well be one for
law enforcement, Treasury, or the State Department to solve.
Today's hearing is designed to focus on the use of tools in
the regulated market to catch and to prevent game manipulation.
My hope is that today's discussion will showcase the work
already underway to protect the integrity of sports and at the
same time identifying where we can and should do more. I look
forward to hearing from our witnesses.
Senator Blackburn. Thank you, Mr. Chairman. We will begin
our round of questioning now.
Ms. Thomas, I want to come to you. When we speak about
sports integrity, our states have really been on the front line
when it comes to protecting fair play and also protecting
consumers from harm. You talked about this in your opening, I
know that Tennessee has taken a technology-first approach in
dealing with this.
So I want you to talk a little bit about Tennessee's
approach and how you have handled or will handle potential
instances when it comes to match fixing and questionable bets?
Ms. Thomas. Thank you for the question. Yes we are a
technology-forward agency and recognize that we need to move at
the speed of business and not always at the speed of government
to keep up with our industry and mitigate all risks that we
can. And I described what our rules require, but I want to
emphasize that our standard of what our sportsbooks and their
vendors can use is one of commercial and technological
reasonableness, which of course, evolves and improves over
time.
That gives our sportsbooks flexibility to run their
operations and use vendors that they believe are best suited
for their needs or develop technology in-house. We also
internally in our agency use technology to monitor what is
going on with all of our sportsbooks. We ingest data from our
sportsbooks, from our vendors related to compliance issues,
related to any kind of technological changes, any changes to
any of their operating systems comes to our office. And we also
ingest data from players that gives us insight into issues that
they are seeing, and----
Senator Blackburn. So let me jump in. You're taking vendor
data and player data?
Ms. Thomas. And sportsbook data. Yes, ma'am.
Senator Blackburn. OK.
Ms. Thomas. Yes. And then we're able to use that data to
look at patterns of what might be happening with compliance
areas. Now, with integrity issues, that might--that may be a
way that we identify integrity issues, but we also have back-
office access to all of our sportsbooks platforms so we can see
real-time account-level data. We can also see their integrity
providers like IC360 and IBIA. We can see their platforms, and
so we can see what's being reported by those sportsbooks in
real time and how others are responding.
We also have a platform access to geolocation data, so we
can see wagering geolocation pings when deposits are made, when
wagering activity takes place, when odd movements happen or
differences in geographical locations and wagers that are
taking place. And that allows us to have a lot of data at our
fingertips to analyze when there is suspected activity of match
fixing or otherwise that we can then package and send to sports
governing bodies, send to law enforcement, and investigate.
And we have done that. I want to make sure I get my numbers
straight, but as of May 14, we had investigated 25 potential
integrity cases where suspicious wagering activity occurred in
Tennessee that could have indicated the use of inside
information. A few of these cases are currently pending, but 17
of these matters were closed and were referred to sports
governing bodies and law enforcement, including 13 of those to
the FBI.
And where an integrity matter is not criminally referred,
it is because we identified that it was just somebody had a
good day.
Senator Blackburn. Thank you. Mr. Miller, do your members
advertise to youth?
Mr. Miller. We do not.
Senator Blackburn. Do you advertise on social media
platforms?
Mr. Miller. We do have members that advertise on social
media platforms, yes.
Senator Blackburn. And you consider that is not advertising
to youth?
Mr. Miller. I think that the algorithms that are built
around the idea of----
Senator Blackburn. They don't build their algorithms and
they don't open them. Mr. McHenry, do you--do your members
advertise to youth?
Mr. McHenry. No.
Senator Blackburn. Do you advertise on social media
platforms?
Mr. McHenry. Yes, and we welcome the additional tools. And
as a parent, I laud your goals of protecting our kids online.
We want enhanced tools so we can make sure----
Senator Blackburn. So why are you on those platforms?
Mr. McHenry. Pardon me?
Senator Blackburn. Why are they on those platforms?
Mr. McHenry. Because they're very popular. They're very
popular----
Senator Blackburn. With kids.
Mr. McHenry. With adults. The average age of----
Senator Blackburn. And we've got a problem with 11-year-
olds.
Mr. McHenry. The average age of the participant on----
Senator Blackburn. Let me ask you this----
Mr. McHenry.--prediction markets is 33.
Senator Blackburn. I want to talk a little bit about the
prediction market approach to regulation and consumer
protection. And let's go to a LinkedIn post that Kalshi CEO
Mansour wrote about the company taking a regulatory-first
approach, his term, to accelerate growth. And I agree that
innovators need light-touch rules, and prediction markets are a
great place for innovation. We realize that. I think that it is
important that we take action to make certain these
marketplaces are going to be safe.
So talk for a moment about how your association is
approaching consumer protections, and what you are going to do
to be certain that you're not on these platforms where children
are the primary user of these platforms?
Mr. McHenry. Yes, and thank you. And thank you for your
leadership on protecting our kids online. As a parent, I share
your goals. I very much share your goals. Our coalition members
adhere to best practices on advertising. There's a complete ban
of anyone under 18 from touching these products. We understand
there's a conversation about the age requirements for
prediction markets. We welcome that conversation.
But to be clear, these financial products, just like
securities, are available to 18 and older. Ninety-seven percent
of our users of the volume on prediction markets are over 21.
The average age is 33. The goal is to get customers that will
be repeat customers that are interested in participating, but
not targeting kids.
And every enhanced tool that we can take, and our members'
companies can take, to ensure that under-18 don't even see our
advertising online is a very important mark that we take and
undertake, but we lack fully the tools necessary to block that.
Our member companies will take enhanced surveillance of
those that they think may be using their parent or someone
else's phone. We take extra effort to make sure that they don't
have that access. And we follow the best tools that are
available to make sure that we know if anyone has any
touchpoints to the leagues or the folks that we view as
insiders, and they are--they are banned from using our
products. Full ban. They can't even trade. And that is an
undertaking that's very different than the rest of the
ecosystem.
Senator Blackburn. Thank you for that. Dr. Levant, I can
tell you want to respond to that, but as a courtesy to my
colleagues, I'm going to call back--come back to you for that
response. Senator Hickenlooper, you're recognized.
Senator Hickenlooper. Thank you, Madam Chair. Thank all of
you for coming. And Dr. Levant, I particularly think your life
experience is relevant and real.
Mr. McHenry, thank you for your service. You bring a
reputation from the House, but I think you need to be very
careful of how you're using that. I think prediction markets,
you know, largely advertise themselves as financially life-
changing tools for average people that can allow users to earn
money through their prediction accuracy. Now, one example I can
give you, Kalshi partnered with a young woman on TikTok who
said--so this is a partnership--who said that she struggled to
pay her rent, but by placing bets on Kalshi, she was able to
win enough to cover her rent for two years.
I know you're welcoming conversations, but do you think
that's responsible to hold that up as a model for people that
are having trouble making their rent, that they should go on to
prediction markets because they're going to be better at
predicting what is clearly a random occurrence?
Mr. McHenry. These contracts are not fully random, and
these contracts----
Senator Hickenlooper. They're not fully random, but if it's
truly--if there's no inside information, they are largely
random.
Mr. McHenry. The predictive capacity and the specifics of
the case you raise, I'm unaware of. This is----
Senator Hickenlooper. I'm telling you, now you're aware of
it, and this isn't a case of some random person. This is a
business partnership with the people that are paying your
consulting fee.
Mr. McHenry. So thank you for--I will attempt to answer
your question, which is these are two-sided markets established
by peer-to-peer----
Senator Hickenlooper. I get that. I'm talking about what
the incentive that advertising plays in these types of markets.
Let's move on. I think I look at the age issue as every bit as
important as encouraging people that are struggling to make
ends meet. I think it's specifically dangerous for minors to
get into sports betting, and especially on prediction markets.
That's why almost all the states say it's 21, not 18, but 21.
Prediction markets let users as young as 18 bet on sports, but
they also market their products to younger, more vulnerable
audiences who are in many cases adept at getting around the
platform precautions.
There have been reports that Kalshi has been using young
social media influencers, as young as 15 years old, to promote
its platform to young consumers. Is that true?
Mr. McHenry. Not to my awareness.
Senator Hickenlooper. And you wouldn't sanction that?
Mr. McHenry. No.
Senator Hickenlooper. Young 15-year-old influencers saying
why this is--these prediction markets are useful and a valuable
investment of their--the risk of their money.
Mr. McHenry. I wouldn't condone anyone using TikTok, but
that's a separate matter.
Senator Hickenlooper. Let's put it this way. Does Kalshi
have any age restrictions at all on the influencers that it
works with, basically hires, in order to influence the market
that it--or the audience that it markets to?
Mr. McHenry. They're one of the member companies for the
prediction markets. I can direct you to them answering that
specific question.
Senator Hickenlooper. No, no, I'm talking about Kalshi. I'm
not--I don't want to go through the rigmarole--I mean, you're
saying we're open to the conversation. Why isn't these
prediction markets--why isn't Kalshi out in front and picking
out these issues and saying, we're going to deal with this and
here's how we're going to--one, two, three? We shouldn't have
to go through hearings and slow it down. Every day that they
can stall, they're going to make more money. I get that. But
that means all the more, if you want to be the responsible
supporter, you need to help them get out in front of this.
Mr. McHenry. Well, they are, and our members are. These are
onshore, regulated by the CFTC, and they comply with Federal
law and the regulations, and they have complied with all the
court cases.
Senator Hickenlooper. But the CFTC, we know, is
inexperienced, doesn't have any real regulations around sports
betting.
Mr. McHenry. They've been doing this for----
Senator Hickenlooper. When you look at minors, they're
easily manipulable.
Mr. McHenry [continuing]. These contracts for----
Senator Hickenlooper. I think the self-certification
process is a good example. The CFTC allows prediction markets
to launch new contracts just one business day after filing
them----
Mr. McHenry. That is standard practice for----
Senator Hickenlooper.--without any CFTC review at all.
Mr. McHenry. No, no, the CFTC reviews those contracts.
Senator Hickenlooper. Not in one day, they don't.
Mr. McHenry. Yes, they do, as they do for the rest of the
commodities marketplace. And furthermore, the CFTC has
regulatory authority to remove contracts or unwind contracts
off after the fact if they view that was manipulated or there's
fraudulent activity. The CFTC is a cop on the beat, has the
capacity to oversee this market, just as they've done with the
broader commodities marketplace that's been around and well-
versed for decades.
Senator Hickenlooper. There is literally no one that I
know--you're the first person who's told me you think--that
they think the CFTC is up to the standards. Well, let me go--
let me go last, Mr. Miller----
Mr. McHenry. I'd say billions of dollars of contracts----
Senator Hickenlooper. No, it's OK. It's OK. Mr. Miller, you
stated that regulated gambling benefits from the--from the
revenues they collect on taxes from gaming. Colorado collected
$45 million last year. It's in the billions over the last
number of years if you look at all the states and the tribes.
If prediction markets continue to operate as unlicensed
sportsbooks paying no taxes, is it going to reduce the
resources available? In Colorado, we use that for water
projects and all kinds of outdoor recreation opportunities. Are
those resources available to states like Colorado going to be
diminished?
Mr. Miller. Well, thank you for the question. Of course,
what we've seen is basically a tsunami that has been created by
the prediction markets in a completely unregulated manner.
There's not one single person on this dais or anybody that was
around during 2010 when we did Dodd-Frank that believed that we
were enabling and creating the Federal Department of Gambling.
So yes, they are absolutely not competent to handle this,
and two, they are absolutely hurting tribes and states
financially.
Senator Hickenlooper. Thank you. I yield to the chair.
Senator Blackburn. Senator Curtis.
STATEMENT OF HON. JOHN CURTIS,
U.S. SENATOR FROM UTAH
Senator Curtis. Thank you. Mr. McHenry, I'm conflicted
whether I call you chairman, Congressman, speaker, but I will
tell you, it is a delight to see you again and really enjoyed
serving with you. If I'm honest, even a couple of months ago, I
would not have been able to tell you what a prediction market
was. And so could you help me just like in one sentence to the
man and woman back in Utah, what is a prediction market? Just
like in one sentence.
Mr. McHenry. It is an open exchange. It is under
commodities regulation called a swap. You have folks that have
a contract. Some say yes, some say no, and they determine it.
The marketplace, the consumers, and the participants determine
what is the ratio on the contract, the likelihood of something
happening.
Senator Curtis. And what's exactly happening when a
purchase event contract is purchased? Just very, very--like for
the people on the ground who don't understand the
technicalities of this, tell me exactly what's that.
Mr. McHenry. The easiest thing for me to explain is in the
political setting, right? In the political setting, is John,
Jane, or Joe going to win the election? And after the election,
the contract is certified based off of information on whether
or not that happened, and then people are paid out based off
the ratio of that final contract.
Senator Curtis. If I were hearing that back in Utah, I
would say, I think something might happen, I'm going to put
money down on it, and I have the chance of either making more
money or losing money on that. Is that--is that accurate?
Mr. McHenry. Yes, and it's an uncertain outcome, just like
whether or not you're going to have a crop that comes in this
fall or not based off of weather and unpredictable events along
the way.
Senator Curtis. So if I'm talking to these folks back home
in a town hall meeting, they're going to say to me, tell me how
that is not gambling, right? It seems to me every definition of
gambling.
Mr. McHenry. Well, this has--I understand how that is
viewed. When grain futures came to fruition over 100 years ago,
it was viewed much the same, that this is an uncertain outcome
on whether or not your crop will come in in the fall, and you
can hedge against it in the marketplace about an uncertain
event that is driven largely by acts of--acts of God, Mother
Nature, and crop yields, so----
Senator Curtis. Can I interrupt you, only because of time?
Mr. McHenry. Sure.
Senator Curtis. I know what you're saying is important, but
as you know, we have very limited time. My father was an
insurance agent and taught me that you buy insurance for things
you can't afford to pay for. And it feels like we've moved from
the farmer who's buying crop insurance because he can't afford
it, if he'd be wiped out, right, versus betting for an income
or perhaps loss on that.
And I guess my fundamental question is, like, how is that
any different than a sports wager or roulette betting?
Mr. McHenry. Well, it's based off the business model. The
business models are fundamentally different from a sportsbook.
The sportsbook, the house sets the line, and when the consumer
loses, they profit. And for an exchange like this, the exchange
is based off of two individuals that benefit and they pay a
fee, just a flat fee for that engagement. The business models
are very different. The question is, what do we do----
Senator Curtis. Once again, just simply because of time----
Mr. McHenry.--about these societal choices and how we
regulate them?
Senator Curtis.--I don't want to cut you off, but you know
the drill here. We're just so limited time. Dr. Levant, you
have not had much chance to weigh in. I'd love you to weigh in
on the speaker's thoughts.
Dr. Levant. It's difficult to know where to start, but let
me take the most recent comment Poker and parimutuel horse
racing have the exact same business model. No one would dispute
they are gambling. Sports futures contracts are gambling. The
business model is just to take the money off the top. The house
has to win every time and the public loses. That's sports
contracts.
The other part I want to address is the--I would have used
tsunami, but Mr. Miller used it, I'll use avalanche of
unregulated advertising on social media. I've, over the last
year, spoken in six prep schools in four different States. This
is not exactly a scientific survey, but I asked the students in
each of these schools at the start, how many of you know what
Kalshi is? 95 percent of the hands go up. I ask, how many of
you know what a Same-Game Parlay is? 95 percent of the hands in
the room go up. And it's all from social media.
Senator Curtis. And I'm going to--sorry, I'm going to do
the same thing.
Dr. Levant. Please.
Senator Curtis. We're just so short on time. So Congressman
McHenry, let's just put that aside for a minute. Just overall,
why do we regulate gambling? As we all know gambling and would
all agree to gambling in this room, why is it we regulate it?
Mr. McHenry. Because society has determined that this is
not in society--well, elected officials have determined it's
not in society's interest, and therefore put weights and
measures around and protections.
Senator Curtis. Great. And Dr. Levant, we know you're going
to agree so I'm not even going to----
Dr. Levant. This is why we regulate it. It's a known
addictive product, just like heroin. That's why we regulate it.
Senator Curtis. And this is where I really want to point
out the state of Utah and the state of Hawaii. We've made a
conscious decision because of these impacts to not allow
gambling of any kind in our state. And, you know, it won't
surprise you to know from that perspective, I see this very
differently than a lot of my other colleagues. So you can see
why I take a close interest whenever platforms begin offering
something that feels like gambling, that talks like gambling,
that smells like gambling.
And several months ago, Senator Schiff and I introduced a
bill. It's called The Prediction Markets are Gambling Act to
stop the CFTC-regulated exchange from offering sports betting
and casino-style contracts. And quite frankly, it's about--for
me, it's about preserving the State's rights and protecting our
State's ability to do that. Wish I had more time.
Just a real quick question for Mr. Miller. I'd like to
build on that. I think this is a similar question you have.
States and tribes have spent decades establishing their own
approaches to gaming. Some allow it under strict regulation.
Others, like Utah, choose not to allow it at all. These
decisions reflect local values, consumer protections, and in
many cases, significant economic interest.
So help me understand this. If products that closely
resemble sports betting can be offered nationwide under a
Federal regulatory framework, what does that mean for the
ability of states and tribes to actually enforce the choices
they've made?
Senator Blackburn. And if I can intervene, the gentleman is
a minute and a half over. If you'll have that submitted.
Senator Curtis. Very good. Thank you. Very appropriate.
Senator Blackburn. Thank you. Senator Baldwin.
STATEMENT OF HON. TAMMY BALDWIN,
U.S. SENATOR FROM WISCONSIN
Senator Baldwin. Thank you. I'll go along those same lines,
Senator Curtis. So the Commodity Futures Trading Commission
prohibits registered entities from listing trades, agreements,
contracts, transactions, or swaps that relate to gaming. The
rule exists to protect consumers from fraud and preserve the
integrity of sports competitions.
I understand that the Trump administration--under the Trump
administration, the Commission does not intend to regulate or
review prediction market platforms that offer sports betting.
Yet Wisconsin tribes offering these exact same services operate
under multiple State and Federal regulations.
Mr. Miller, can you walk us through the types of review and
regulation that tribal gaming operations offering sports
betting must go through in Wisconsin?
Mr. Miller. Yes, Senator, thank you for the question.
Tribal nations are recognized by IGRA and are governed under
that Federal statute. But importantly, the tribes negotiate
with the State government as a sovereign equal. They work to
gain exclusivity. They work on terms. They work on ensuring
that they abide by all of the same--all of the protocols that
are important from a regulatory perspective, and that that is
why that when prediction markets have come into Wisconsin
recently, the attorney general there has acted, and we applaud
that. We applaud the other 40 attorney generals that have also
done that.
It's unfortunate that the CFTC has chosen to sue the state
of Wisconsin because of that and really harm tribal sovereignty
and the State's right to determine what sort of gambling exists
in that state of Wisconsin.
Senator Baldwin. Yes, and Mr. Miller, how does this
regulatory framework compare to prediction market platforms
offering essentially identical services?
Mr. Miller. Well, as again, as I made in my opening
statement, you know, we're one of the most highly regulated
industries in the country, you know, from everything from, you
know, internal controls, licensing, auditing, and being
actively overseen by the State and tribal governments, this is
quite--it stands in quite contrast with the prediction markets
that are now entering into really every state, including those
that Senator Curtis mentioned in the state of Utah and Hawaii
that have chosen not to have gaming, either tribal or
commercial.
Senator Baldwin. Mr. McHenry, are your members willing to
undergo review and regulation by State and Federal regulators
that is comparable to what Mr. Miller just described for tribal
gaming operations?
Mr. McHenry. They are fundamentally different products and
fundamentally different business models. And what our member--
--
Senator Baldwin. The answer would be no?
Mr. McHenry. Well, let me--if I would finish. They are
willing and do submit themselves to State reviews just like
everybody else regulated by the CFTC. And just like every other
Federal financial product, and so that is similar for
everything from grain futures to an event contract on who's
going to win the next Governor's race.
And so everything in between is regulated the same, and
taxes are paid at both the Federal and State level as a result
of those contracts as well.
Senator Baldwin. So the answer is no?
Mr. McHenry. Well, they're federally regulated, so if you
wish--in our system, our federalism system, and according to
Third Circuit ruling, that these are CFTC-regulated products
under the Commodities Exchange Act and----
Senator Baldwin. But your members would not be willing to
undergo the type of review and regulation by State and Federal
regulators----
Mr. McHenry. What I would submit is that they----
Senator Baldwin.--that is comparable to tribal gaming?
Mr. McHenry. What I would say is our member companies have
enhanced surveillance greater than any casino and greater than
any sportsbook in the country. We do more market surveillance.
We ban users on a proactive basis rather than a reactive basis.
And we have a different business model that says no matter what
happens with the contract, there's a small fee to the exchange,
and the sportsbook is incentivized, as opposed to a sportsbook
that is incentivized they profit off of losers, not off of
winners.
Senator Baldwin. Mr. Miller, any retort?
Mr. Miller. Sure. You know, at the end of the day, there
are a lot of conversations about what it is these entities are
doing. At the end of the day, they're running sportsbooks at a
national level without any of the regulatory constraints and
frameworks that have been created either in Tennessee or in any
of the other states that have chosen to legalize sports betting
or any other gaming.
Senator Baldwin. Thank you.
Senator Blackburn. Senator Schatz.
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator Schatz. Thank you, Chair. Thank you all of you for
being here. Mr. Sadin, in your work as an integrity monitor,
are there some categories of bets more likely to threaten the
integrity of the sport than others?
Mr. Sadin. Yes, I certainly would categorize a couple of
different types of markets as more vulnerable or more
susceptible to manipulation.
Senator Schatz. What are they?
Mr. Sadin. I would say, generally speaking, player props,
micro-betting, in-game market circumstances in which an
individual or singular person may have more impact than a
group, that would----
Senator Schatz. And the micro-prop thing is insidious in
the particular way that it can be manipulated a little more
easily by a player or by anyone else, or a sort of an injury
proposition bet or anything like that. And then the sort of the
bigger you get, the harder it is to fix. Not impossible, of
course, but even a player prop, say Terry Rozier gets six
rebounds this evening, is a little harder to game than Terry
Rozier shoots the ball or doesn't, right?
And so the more micro you get, the more insidious it is
from an integrity standpoint, but also to Dr. Levant's point,
it also sort of taps into the addictive, manic, algorithmically
driven problem that we're dealing with. Is that fair to say?
Mr. Sadin. Yes, I think that's fair to say. It's nuanced
and there's certainly a continuum, but generally speaking,
that's accurate. I would say, just to be clear, that I still
would be a strong proponent of wrapping regulation around those
types of markets as opposed to pushing that activity offshore.
Senator Schatz. Oh, well, OK. So let's go to the offshore
question. Mr. Miller, could you speak to the problem of illegal
offshore sportsbooks and how they impact the integrity of
sports in the United States? I know the answer to this
question, which is basically they don't work with people like
you, but go ahead.
Mr. Miller. Well, thank you for the question, Senator. You
know, it has been a challenge. I've been in this job now seven-
and-a-half years. I think I've sent letters to every director
of the FBI and the head of the Department of Justice asking
this to be prioritized because it's very important. It's very
easy for people of age and people underage, to access the
offshore illegal marketplace.
And so there are--there is obviously a role for--important
role for law enforcement at the Federal level, State
Department, others that have the ability to actually put the
pressure on some of these countries that house and facilitate
illegal sports betting operations. And for us here, you know,
it's $700 billion of money that goes out of the pocket of
Americans into offshore online illegal betting operations
without any of the consumer protections of the legal market.
Senator Schatz. Yes, we think we legislatively have a
pathway here, and it doesn't solve every problem, and it
certainly doesn't solve every problem as it relates to the
challenges that individuals and society is facing with
gambling. But if you empower the FTC to go after the payment
processors, and then they would have a perfect right to go and
say, hey, you may not work with these offshore shops if they're
not complying with the Federal law having to do with micro prop
bets.
So, Dr. Levant, thank you for your personal story. I was
sort of staring at my phone as one does, I apologize. And as
soon as you started to talk, I really--I really applaud your
life's journey and your--and your life's mission now.
Dr. Levant. Thank you, Senator.
Senator Schatz. I want to--I want to keep talking about
microprop bets. A study out of Australia found that sports
bettors who bet on micro events, that of that cohort, 78
percent met the criteria for gambling that may cause
significant harm to their lives. Tell me about why microprop
bets are different?
Dr. Levant. Senator, they are fundamentally different,
inherently dangerous, and frankly, defectively designed
gambling products. The human brain is not built to absorb an
addictive product every 10 seconds or less.
The bigger problem is the business model. In order for
micro-betting to work, it involves the leagues selling their
data for billions of dollars. It involves technology and AI
companies, sportsbooks, and now prediction markets. They all
want a piece of the pie. The only way to keep that pie going is
to get the American public to gamble more often, more quickly,
on more highly profitable, i.e., addictive products. That's the
quote I just read to you from Genius Sports.
That's the business model. And this is where Congress has
to come in. This is not what the American public wanted when
the Murphy case was decided. We loved our sports. Sports have
become the equivalent of a nonstop slot machine because of
these data deals. And the only way to protect the public is at
the Federal level with minimum Federal safety standards.
Senator Schatz. Thank you, Dr. Levant. And we'll be--we'll
be talking to Republicans and Democrats on this committee and
their staff about our legislative proposals. And again, it's
not going to solve every problem, but I think this particular
problem is especially acute and needs to be dealt with
immediately.
Senator Blackburn. Senator Cruz.
The Chairman. Thank you, Madam Chair. Prop bets are at the
center of recent game-rigging allegations. For instance,
bettors wagered that Terry Rozier would underperform during an
NBA game, when Rozier took himself out of the game early,
allegedly to help the bettors cash in. Other gamblers wagered
that two Cleveland Indian pitchers would throw balls instead of
strikes after the pitchers allegedly tipped off gamblers.
Similar incidents have occurred in other professional leagues.
Mr. Miller, two questions. First, are there certain prop
bets that sportsbooks should not offer because of the integrity
risks they pose?
Mr. Miller. Senator, thank you for the question. I would
answer that question by saying that one, the regulated markets
in each of the individual states have made determinations with
regard to prop bets. I think you have seen a movement to limit
and/or eliminate prop bets in the states, and believe that in
those states, they are the best determined to make those
determinations around which props should or should not be
allowed.
The Chairman. So, second question.
Mr. Miller. Yep.
The Chairman. Do you agree that if a league comes to a
sportsbook and says a bet creates an integrity risk, the
sportsbook should not offer the bet?
Mr. Miller. I do agree with that.
The Chairman. Congressman McHenry, in a recent advisory,
the CFTC suggested prediction markets should consider the input
of a sports league before offering event contracts on its
events. If a sports league tells a prediction market not to
offer certain event contracts, such as those that resemble prop
bets, should the prediction market honor that request?
Mr. McHenry. Yes, and they have.
The Chairman. Over the past five years, several athletes
have been caught manipulating their performance or giving
insider information to sports gamblers. Independent integrity
monitors often play a leading role in detecting this activity.
When suspicious betting patterns emerge, monitors quickly
circulate information among State regulators, sportsbooks, and
leagues.
Mr. Sadin, you founded and lead one of these--you founded
and lead one of these integrity monitors. Can you provide an
example of how the current system has identified and caught
game manipulation?
Mr. Sadin. Thank you for the question, Senator, and I'm
happy to. I could share a couple of different examples,
anonymized for obvious reasons. What I would say is that in the
first circumstance, our analytical work identified what we call
inverse line movement across correlated markets. Essentially
what that means is first half, full game point spreads, those
are correlated markets. You would expect them to move in tandem
with one another. We identified a circumstance in which they
were moving materially in opposite directions. We surfaced that
circumstance by an alert to our broad sportsbook operator
network and very promptly received feedback from about 10 to 12
different regulated sportsbook operators that said, we're also
seeing pretty significant movement and potentially suspicious
activity across those markets.
Our system automatically parses all of that feedback and
consolidates it into a report that we then surface to the
appropriate State regulators, to the appropriate sports
governing body, and then obviously back to the impacted
sportsbook operators. That's a circumstance in which we
identified something, but there are dozens, hundreds, perhaps
thousands of circumstances in which operators identify directly
to us a circumstance they've highlighted, and then we
disseminate it out across the ecosystem.
The Chairman. Do you have any suggestions for improving the
system to make it easier to catch game manipulation?
Mr. Sadin. Generally speaking, I would probably refer back
to my written statement, which is anything that would further
collaboration, engagement, and transparency across the myriad
stakeholders that operate in the space. So, from an integrity
monitoring perspective, I would probably urge platforms to
widen the parameters in which they deem suspicious activity may
have taken place for reporting purposes. For ProhiBet, I think
implementing a list of prohibited patrons on a proactive basis
to ensure you're preventing transactions from prohibited
individuals before they ever happened, is crucial.
And then, obviously, from an education standpoint, vanilla,
same old training is not going to work. This is a new frontier.
There are emerging vulnerabilities. There are bad actors that
are constantly innovating. We need to make sure that curriculum
is refreshed and constantly reinforced.
The Chairman. There is serious disagreement about whether
the CFTC can unilaterally allow prediction markets to offer
sports event contracts pursuant to the Commodity Exchange Act.
Many simply see prediction markets as a workaround to State
gambling laws. The courts are split. Ultimately, unless
Congress acts, the Supreme Court may have to decide the issue.
Congressman McHenry, when Congress debated Dodd-Frank, some
senators expressed concern that event contracts could become a
vehicle for sports gambling. Isn't that in fact what has come
to pass? The CFTC argues that sports event contracts fit the
Commodity Exchange Act's definition of a swap because sports
outcomes have economic consequences. But what is the economic
consequence of, say, whether a pitcher will throw a ball or a
strike?
Mr. McHenry. Well, like, getting a playoff game has a
material impact on the economy around that stadium and that
town. So you can see economic impact on whether or not you get
a playoff game in your town, or the t-shirt manufacturer on the
Super Bowl outcome. So there is economic connectivity for that.
But the debate around Dodd-Frank, in my experience in Dodd-
Frank over on the lowly House side, we did not have any
substantial discussion about the nature of swaps in my
committee. But in the Ag Committee, both here in the Senate and
in the House, there was a wide new definition for swaps. And
that authority was given to the CFTC. And then the Chair of the
CFTC, Gary Gensler, wrote rules that encompassed a wide array
and definitions of swaps. As a result----
The Chairman. What about an answer to the specific question
about what is the economic consequence of whether a pitcher
throws a ball or a strike?
Mr. McHenry. It is up to the consumers to decide that under
swaps--under a swaps definition. And it will be for the courts
and the Congress to decide whether or not they like that. Under
the Commodities Exchange Act, onion futures are banned. I don't
think we have a serious debate about onions, but at the time
they did. So we welcome Congress's input here and the
rulemaking of the CFTC on these definitions.
The Chairman. Ranking Member Cantwell.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Mr. Chairman, and thank you to
Senator Blackburn and Hickenlooper for doing this subcommittee.
And I think that last conversation is illuminating, and I'd
like to follow up on it, but I'd like to remind everybody we
had a financial collapse of our economy because we didn't do
the job of regulating derivatives. And I remember somebody on
the Senate floor actually saying, we can't regulate them, we
don't know what they are. That's exactly when, and it had a
conservative journalist who basically said the lack of clarity
is fraud. If you can't understand it, then yes, there is
something behind the situation.
So to this, I definitely want to say that fans must have
confidence that games are being played fairly and honestly. So
I agree with the Chairman on that. That's what makes
competition great. And that is why Senator Cruz and I are
conducting bipartisan inquiry into how the leagues, the
sportsbooks, and the stakeholders are protecting the integrity
of sports and teams.
But I believe that this integrity crisis goes beyond how we
monitor players. In betting activities, we must also ask, why
would a professional athlete making millions of dollars risk
losing everything to place a bet? In many cases, it's the same
answer: online betting platforms can be highly addictive.
So I'm glad our witness, Dr. Levant, is talking about that
today. Whether you're a star athlete or a struggling college
student, and once more--once they're hooked, they're designed
to keep them coming back for more.
So the conversation that we just had had, Mr. Miller, I'm
just trying to understand, because our former colleague here,
Congressman McHenry, talked a little bit about the history, but
in 2010, Congress amended the Commodity Exchange Act in the
wake of that financial crisis I just said, and under Section 5,
Congress authorized the CFTC to prohibit prediction markets
from offering contracts that involved gaming and gaming
activities, and in 2011, they issued Rule 40.11, which banned
prediction markets from offering contracts involving gaming
activities.
In doing so, they stated the rule was consistent with our
congressional intent, and the CFTC prohibited sports betting
contracts for more than 15 years under this rule. But all of a
sudden, starting in 2025, prediction markets began offering
sports gambling contracts.
So my state wants to know why the Indian gaming
associations, who basically have lived by the rules in their
state and lived by the rules of a regulated entity, are now all
of a sudden competing with somebody that is not a regulated
entity that's basically offering the same product?
So in 2025, the Indian gaming industry generated more than
680,000 jobs for rural Americans, and it has served as an
economic livelihood. If the prediction markets are allowed to
keep operating unchecked, does this pose an existential threat
to both tribal sovereignty and to Indian country? And what can
Congress do to better protect Indian gaming?
Mr. Miller. Well, thank you, Ranking Member. Clearly, we
share the same view. As someone who was around during Dodd-
Frank, and recognizing that this was a response to a financial
crisis that was created by lax regulation, or in fact no
regulation, it's really hard to believe that anybody could pull
from that the idea that we could create a national sportsbook
run through the CFTC. It just--it's hard to even imagine that
anybody could make the argument, but here's where we're here
today.
In fact, there were Federal statutes on the books when
Dodd-Frank was amended and created. IGRA, which established the
framework for Indian gaming. PASPA, which actually, you know,
was struck down in 2018, and the Wire Act. All Federal statutes
that should have been at least looked at and modified if the
CEA was going to be amended to create the Federal Department of
Gambling. Of course it was not. It was never intended to be
that.
And then finally, when in 2018, when the Supreme Court
actually debated Murphy v. NCAA, even the Supreme Court didn't
understand and/or recognize that there was a backdoor
opportunity for the sports betting industry through prediction
markets back in 2018. And so yes, there's real harm here.
Chairman Bean, who is the, you know, one of your constituents
who runs the Indian Gaming Association, you know, he and I are
very aligned on this.
Indian country is scared. They believe that, you know,
gaming has been a transformational economic opportunity for
some of the people that have been treated worse than almost
anybody else in this country's history. And gaming has created
economic vitality and an opportunity for them. And that
opportunity is very much at risk because of prediction markets.
Senator Cantwell. Well, I just--I just looked it up because
I wanted to make sure. I didn't get that quote quite right
before. It was P.J. O'Rourke, and he said, complexity is fraud.
His point was complexity--if it's so complex and you can't
understand it, then complexity is the fraud.
So that's where we are today. No one can answer the
question why we have two competing businesses here. Well, we
have Indian gaming that is offering sports betting, and then
another entity that's offering sports betting, but it's not
regulated in the same way. So I think we got to get answers to
that.
Mr. Levant, I know you've probably been asked this by our
colleagues already, but what do we--what do we do about this
larger issue? You know, there was recent data from Washington
Health Survey shows the troubling trends with youth and
gambling. That these include material increases in the number
of 10th graders who are saying they've engaged in gaming across
states. And how does that online betting help--I mean, are
people just being targeted at this young age?
Dr. Levant. People are being targeted relentlessly. And
this discussion of prediction markets has done something that
others would have predicted--small p--impossible, as Mr. Miller
and I agreeing on an issue. The prediction markets take this,
and not only infringing upon sovereign rights, tribal gaming,
but 18-year-olds, and they're being told it's investment.
I've had six clients in my recovery group who have relapsed
because they were told this is an investment. I'm not gambling,
I'm making an investment. It's just so fundamentally wrong, and
where I disagree with Mr. Miller is there's a huge need for
Federal oversight because of what's happening with children and
young adults and families with online sports gambling. But it's
significantly worse now with prediction markets because they're
acting under color of Federal law, targeting people as young as
18. They don't have to comply with things like self-exclusion.
They're just doing whatever they want to do, and the harm is
growing exponentially.
Senator Cantwell. Well, I thank the Chair. I've actually
gone over my time, but I'm asking him about the impact on
youth. And the Chairwoman and I have worked diligently on a lot
of legislation to protect young people online, so we'll add
this to the list. So thank you so much. Thank you, Madam Chair.
Senator Blackburn. Senator Rosen.
STATEMENT OF HON. JACKY ROSEN,
U.S. SENATOR FROM NEVADA
Senator Rosen. Thank you. I want to thank you, Madam Chair,
and thank you to the witnesses for being here. You know, I'm
just so concerned about all this circumventing the rules. As
they say, a rose by any other name still smells as sweet. If it
walks like a duck and quacks like a duck and looks like a duck,
it's probably a duck.
So I want to talk about responsible gaming loophole,
because licensed sportsbooks are required by State laws to
implement responsible gaming programs, which include deposit
limits, cooling-off periods, mandatory disclosures. Under the
CFTC, no equivalent requirements apply to prediction markets.
Dr. Levant, I have a lot of questions, so if you would be
brief on this. You're working with people with sports betting
problems. Is there a fundamental difference between this
problem, a sports bet versus an event contract? A rose by any
other name is the same. And what is the risk by allowing
prediction markets to circumvent meaningful mandatory consumer
protections? They're just trying to get around the rules.
Dr. Levant. There's no discernible difference. In fact,
people are using it as another form of gambling. And you're
absolutely right, Senator, it skirts--it circumvents all the
rules, including rules designed to keep people safe at the
State level. Completely disregards them.
Senator Rosen. Thank you. I appreciate that. And I want to
talk again about circumventing the rules because most of the
countries only had legalized sports betting less than 10 years.
But--excuse me. While most countries only legalized sports
betting less than 10 years ago, Nevada has a long and, of
course, storied history with regulated sports betting,
legalizing it nearly 100 years ago.
Nevada was a pioneer, and now some of the strongest and
most comprehensive State rules to promote safe and legal sports
betting occur in my state of Nevada. Historically, Federal
action on legal sports betting has often unintentionally pushed
gaming underground and outside of legitimate regulated markets.
Therefore, any Federal action must recognize the strong pre-
existing State and tribal gaming regulatory regimes that ensure
all sports betting, no matter what you call it, what it's
branded as, and it's covered under current State and tribal
law.
So, Ms. Thomas, the next few questions are for you. And I'm
going to ask you to answer, and then I want--I have three
questions, so we'll try to be as brief, I guess, as we can.
What does full compliance with sports betting laws today look
like in practice? And more specifically, what guardrails and
compliance measures from licensing, background checks, to
ongoing geolocation requirements, age verification for apps,
are part of your State's regulatory regime?
Ms. Thomas. Yes, thank you. So first of all, you have to be
over 21 to wager, 21 or over. You have to have--sportsbooks
must make available and enforce exclusionary measures for those
who choose to gamble. And our office oversees a Statewide
exclusion list to make sure that information is communicated.
Credit card deposits are prohibited, extension of credit is
prohibited. It is--we review all markets before they're
offered, and leagues and teams can request that those are not
allowed if they're risky.
Senator Rosen. Really comprehensive.
Ms. Thomas. Yes.
Senator Rosen. Really comprehensive. So just a simple yes
or no: Do you believe prediction markets--or prediction markets
are not currently required to comply with any of the safeguards
you described? Is that--would that be correct for the most
part?
Ms. Thomas. That is correct.
Senator Rosen. I'm going to ask a similar question going
forward. So what is required of legal sports betting companies
to comply with anti-money laundering rules, responsible gaming
safeguards, cybersecurity, and integrity monitoring?
Ms. Thomas. It's extensive. All of those things are
required. Both Federal reporting by the sportsbooks for anti-
money laundering and State reporting for anti-money laundering
and unusual and suspicious activity.
Senator Rosen. So you're watching this to prevent criminal
activity and other cyber incidents. So yes or no again, please,
Ms. Thomas. Prediction markets are not currently required to
comply with any of these safeguards as we just described: anti-
money laundering, responsible gaming safeguards, cybersecurity,
and integrity monitoring?
Ms. Thomas. No, not to my knowledge.
Senator Rosen. Not to your knowledge. Thank you. I'm going
to ask a similar question again. How do operators today
coordinate with State and tribal gaming regulators, our sports
leagues--you've touched on this--law enforcement, and integrity
monitoring firms to identify suspicious activity and protect
consumers?
Ms. Thomas. We are in constant contact with all
stakeholders: leagues, integrity monitors, our partners in
other states including Nevada. We are very close with all of
our partners, and we have to be in constant communication so we
can share important information.
Senator Rosen. You're very diligent in this. And so, yes or
no again, Ms. Thomas. Prediction markets are not currently
required to comply with any of these safeguards. Would that be
correct to the best of your knowledge?
Ms. Thomas. Yes, correct. Not to the best of my knowledge.
Senator Rosen. Thank you. Mr. Miller, we talked a little
bit--we talked about, as Senator Cantwell touched on, gaps in
compliance, particularly in our tribal communities, but both
for State and tribal. You know, when products that are
functioning identical to legal sports betting, they're allowed
to operate completely, completely outside of State and tribal
laws and regulations. What protections, oversight mechanisms,
and accountability structures do you believe they're able to
circumvent? And would you say this is a fair and level playing
field?
Mr. Miller. Well, I think that--Senator, thank you for the
question. I certainly don't believe it's a fair and level
playing field. We believe that getting a gaming license,
whether it be in Nevada or in any other state, is a privilege.
It requires significant due diligence for suitability of that
licensure, the regulations around the licensee and what they
apply for, and then how they behave as a licensee.
We are all, as licensees, we are held to account by 8,400
regulators in the states and tribes all over this country, and
I think that that itself shows that the system is--you know,
it's iterative, it's continuing to get better, but the notion
that somehow or another the prediction markets and the 500
people that work at the CFTC--the CFTC 500 people is less than
the number of regulators in the state of Pennsylvania.
Senator Rosen. Right.
Mr. Miller. That somehow or another they could manage and
facilitate a nationwide sports betting network is laughable.
Senator Rosen. So you would agree that----
Mr. Miller. I do.
Senator Rosen. You just ask for a fair and level playing
field?
Mr. Miller. That's correct.
Senator Rosen. Thank you. I'm going to ask you a little
bit, Mr. Miller, about ongoing litigation. Oh, my time is up.
Are you waiting for Senator Lujan? Do you want me to keep
going? I knew he was coming, so thank you. As soon as Senator
Lujan gets here, we'll defer to him, but----
Senator Blackburn. If the gentlelady will pause for a
moment.
Senator Rosen. Yes.
Senator Blackburn. Senator Hickenlooper and I each have
some additional questions.
Senator Rosen. OK.
Senator Blackburn. But I think Senator Rochester is
planning to return and--no, OK. But Senator Lujan is planning
to return and Klobuchar. No? OK. All right, we will continue.
Go ahead.
Senator Rosen. Thank you, Madam Chair. I appreciate it. I
knew he was on the way, so I was--I didn't realize I was this
far over, but appreciate your consideration.
So, Mr. Miller, you know, Nevada is among many states that
have been pulled into costly litigation with prediction markets
to defend its right to regulate gaming within its borders. We
want to regulate gaming within the state of Nevada. And so what
does the nationwide litigation landscape look like today? And
how long might it take for these questions to be resolved if
it's left to the courts?
And in your view, what are the risks if Congress doesn't
step in to reaffirm that states are the primary regulators when
it comes to gaming and that Congress never intended the CFTC to
regulate gambling nationwide?
Mr. Miller. Well, thank you for the question. I clearly
agree with you. Congress never--it was never Congress's intent
to create a Federal Department of Gambling through the CFTC.
The fact that we have, you know, federalism in this country,
that states have the rights of self-determination, and tribal
nations similarly. This is how we've created a system that
works in America. 8,400 regulators working every day to make
sure that there's integrity in the matches, that the consumers
are protected, and that the state and/or tribe benefits from
this.
And so as it relates to litigation, I think that we're in 9
of the 12 circuits and 41 State attorneys general have written
the CFTC saying, stop it, knock it off, it's not your purview.
And these are attorneys general that span the spectrum from the
farthest left to the furthest right, all agreeing that the
states have the right to do this. And they are spending
extraordinary amounts of money in litigation against Kalshi,
against the prediction markets, and now against the CFTC, who
has inserted themselves as a party using taxpayer dollars to
assert their control and dominance in a world that they quite
frankly have no business being in.
Senator Rosen. Well, this is my last and final question to
follow up on this. The CFTC's current approach, prediction
market platforms self-certify their own contracts for trading.
It's like the hen--the wolf guarding the henhouse, right? And
so that means they decide for themselves whether a new product
complies with the law. They don't have to get any other audit,
and the CFTC has 90 days to review.
Can you name any other Federal or State regulator that
allows the entities it regulates to approve their own products
in this way?
Mr. Miller. I'd love to say the short answer is no. The
short answer is no, but I've never--I have tried to find
another agency at the local, State, or Federal level that
allows participants that are regulated entities to self-certify
that they're adhering to government protocol.
Senator Rosen. Aren't you going to let--always let you give
yourself the benefit of the doubt, I guess, right? Thank you.
Appreciate it.
Mr. Miller. Thank you.
Senator Blackburn. Senator Lujan, you are recognized.
STATEMENT OF HON. BEN RAY LUJAN,
U.S. SENATOR FROM NEW MEXICO
Senator Lujan. Thank you, Madam Chair. Mr. Miller, last
week, four New Mexico tribes sued Kalshi alleging the company's
illegal offering sports betting on tribal lands in violation of
the Federal Indian Gaming Regulatory Act. Now, there's other
lawsuits that have also been out there. My question is yes or
no: Has Congress provided exclusive gaming rights for Indian
tribes?
Mr. Miller. They have.
Senator Lujan. And is it your belief that some of these
sports betting and other predictive models are in violation of
State and Federal gaming laws by operating on tribal land?
Mr. Miller. I do believe that's true.
Senator Lujan. So is there agreement on the panel that
Congress needs to do something to weigh in here? Mr. Miller?
Mr. Miller. My view is Congress needs to reaffirm the
rights of states and tribes.
Senator Lujan. Ms. Thomas.
Ms. Thomas. I agree with Mr. Miller.
Senator Lujan. Mr. Sheldon--Sadin, I'm sorry.
Mr. Sadin. It's OK. You know, my perspective is anyone
that's offering markets on sports, no matter what, should be
engaging in some type of control to make sure the integrity of
the sport is preserved.
Senator Lujan. Representative.
Mr. McHenry. I believe we have to see the CFTC rulemaking
that's going on. And if Congress wants to step in and assert
its authority, we welcome the conversation. But as for now, the
courts and the Third Circuit in particular, has given
prediction markets this capacity to offer these contracts.
Senator Lujan. Should these folks be able to advertise to
kids?
Mr. McHenry. No, and the members of our coalition do not,
number one, there's a solid ban at 18. Congress can debate what
is the appropriate option for securities, for commodities, for
whatever it is in society. We would like to be engaged in that
conversation if Congress wants to do that. But for our markets,
for prediction markets, they comply with market surveillance,
AML requirements, know your customer requirements.
All of our members maintain an active ban list of folks
that we have coordinated with leagues. We'd like to have
relationships with all of them to ban folks that are insiders
as designated by the people they work with or workaround. And
we maintain that by using technologies like IC360, other
surveillance techniques like geolocation.
And in particular, when it comes to tribal issues, I think
it's very important that anyone who's engaged with tribes
respect their treaty rights that have been longstanding in this
country and have been and should be affirmed by the courts and
Congress.
Senator Lujan. I appreciate your thorough response on that
last one. I should have said, Mr. Chairman, but it's always
good to see you, Patrick. Dr. Levant.
Dr. Levant. Congress most certainly--I think this hearing
proves it--must certainly step in with prediction markets, but
the Congress needs to go further. And this is where I come back
to my disagreement with Mr. Miller and the AGA. It's ironic to
me that the AGA is asking Congress for help with prediction
markets, but yet telling you at the same time you have no role
in regulating sports betting.
There needs to be minimum Federal safety standards enacted
governing sports betting, which will also recognize the
sovereignty of states to go further if they like. But this is
too big, involving too many entities. There's no way to prevent
harm without Congress stepping in and creating minimum Federal
safety standards, sir.
Senator Lujan. I appreciate. I agree with that, sir. Now,
Madam Chair, while I know this hearing is on the subject of
sports betting integrity in America, there's one thing I wanted
to raise today because it's sports betting proximate. And maybe
there are some folks in this room that like to collect trading
cards, baseball cards, soccer cards, Pokemon cards, cards of
cards. There are even cards of members of the Senate and the
House of Representatives.
The reason I'm raising this is I don't know how many of
you--has anyone in this room heard about Whatnot? Whatnot.com?
Anybody? I see a few yeses. Look, this is a company that's
being sued right now over illegal lottery and gambling. And
what they do is you buy into this website and they draw your
name, they spin, whatever the hell that they do, and they let
kids start doing this with credit cards. And people have gotten
in debt. And I just certainly hope that when we choose to clamp
down on protecting kids, that we do it in all these spaces.
This is ridiculous that people are getting addicted to this
kind of nonsense, that kids are getting in debt, they're
getting their parents in debt, they're driving up credit cards.
And I certainly hope these people get put out of business with
the kind of nonsense with what they're doing to prey on some of
the most vulnerable people in America. I do not want to
distract from this important hearing on what we're doing here.
But Madam Chair, I know this is an area of interest. We're
talking about kids. I just certainly hope that we can dig in,
we can ask the experts, and we can look at this, and that we
don't forget about people like this that are also preying on
kids as well.
So thank you for the indulgence for the time, and everyone
that's here today, I really appreciate your time today.
Senator Blackburn. Well, you've raised an important point,
and what we do have to realize is there are laws and there are
rules in the physical space over certain activities, but in the
virtual space, there are no laws or rules. And as I have many
times said, product safety design exists in every single
industrial sector in this country except in the virtual space.
If you buy a car, there are safety standards. They don't
tell you how to drive the car, but they tell you the car is
safe to drive. And what we are seeing is growth in these
industries where the standards have not been put in place and
the industries have taken off on their own, and then regulation
is being discussed on the backside.
Dr. Levant, I said I would come back to you, and I do want
to go to you on this issue of advertising to children. I know
Mr. Miller says they don't. Congressman McHenry says they
don't. But we know the dirty truth of a lot of this is they are
on these websites that are targeting children and are trying to
build databases of children: eyeballs, the number of eyeballs,
the amount of time they capture them, the amount of time
they're online. Then that is going to give them richer data.
That richer data is worth more money.
So the issue of where children engage with these activities
is a part. Senator Lujan just mentioned it. Senator Cantwell
just mentioned it. Senator Curtis is looking at this issue. And
that presence of gaming or prediction markets on those sites
and trying to pull those children into that and then
algorithmically being pulled further. You've spoken to that in
the issue of addiction. So when it comes to advertising to
children, what has your research shown you and what is the
engagement?
Dr. Levant. Senator, what we're seeing and when we hear--
I'm going to call them gambling companies inclusive of
prediction market companies--when they say we don't advertise
to children, they're speaking about advertising on primetime
TV, on network television. That's not where kids are getting
their entertainment. Children are getting their entertainment
online, on their phones, on Instagram, unfortunately on TikTok,
on a variety of platforms. That advertising is completely
unregulated and it is inundated.
Social media is inundated with various levels of gambling
advertising. One of the most sinister is something the gambling
industry calls affiliates. People they pay to talk about their
platforms, to post about their platforms. The pop-up ads are
relentless, and they're completely unregulated. States can't
address that. Congress has to address that. Because once these
companies go on social media, they are going to, as night
follows day and day follows night, they're going to pull in the
eyes of children and young adults.
And once those eyes have hit and the algorithms have been
triggered, it will continue without any safeguards. So what
we're talking about is delivery of advertising of a known
addictive product to children long before the risk-reward
system of the human brain is fully formed. That doesn't happen
until you're about 25 or 26. So by its very definition, what
they are doing is endangering children for their benefit. It
certainly doesn't benefit the kids. That is problematic.
Senator Blackburn. Mr. Sadin, what do you see in your
research about the advertising? How are you seeing these kids
engaged?
Mr. Sadin. Yes, thank you for the question, Senator. I
don't have a tremendous amount of visibility into the
demographic types that are engaging in this type of product.
For us, our central goal is regardless of sort of who you are,
where you are, you are ensured to be protected on these
platforms with respect to the integrity of sports. And so, if
you are a participant, if you are a prohibited participant, if
you have some access to inside information, if you somehow have
the ability to exert undue influence, then you're being
tracked, and then you're being proactively permissioned to
ensure you're not transacting in markets.
Senator Blackburn. I also want to ask you a little bit, and
we talked a little bit about this yesterday, fair play and the
match fixing that is going on. I wonder what your take is and
how instructive you think what you've seen in that is to the
broader sports and to the microtargeting that is going on?
Mr. Sadin. I mean, I think generally speaking, individuals
who are closest to the level of play, the sport themselves, are
the ones that are most vulnerable, the ones that are at the
most risk, right? So, whether that be collegiate stakeholders,
student athletes, administrators, trainers, coaches, equipment
managers, et cetera, they are the ones that are the most
vulnerable to bad actor harm and threats and approaches.
And so, I think getting them educated to make sure that
they know how to deal with those types of threats and
vulnerabilities is essential.
Senator Blackburn. Congressman McHenry, I think there has
been a lot of discussion around the CFTC as the sole regulator,
but we know there are lawsuits that are in the states. I think
Tennessee has an active lawsuit right now. So I believe that
our State regulators and our State attorneys general have a
role to play in protecting consumers from harm. So you pivot
toward only the CFTC. So how are your members engaging? Because
if you don't have this comprehensive coverage at the Federal
level, the protection does lie with the states. So why would
they not engage with the states to make certain that consumers
are protected?
Mr. McHenry. Because they adhere to higher standards than
what is the average State standard. Give you one example. In
the states that have legalized gambling, there are a dozen that
do not ban advertising to children. So at the State level, it's
not--it's imperfect as well. You have 35 states that allow
sportsbooks in their state regime.
What we have with the CFTC is a requirement for know your
customer, anti-money laundering, market surveillance. The
regulator approves contracts before they go on the market. Then
within 24 hours, they can unwind those contracts if they think
there's fraudulent activity. They have the ability to ban
certain types of contracts. You have the CFTC engaged with the
leagues on data sharing. You have products like IC360 that our
members use to ensure that they police against insider trading
and fraudulent activity.
We do have very high standards for the members that are
part of our coalition. So to say that there's no Federal
standard in this realm is not true. In the general realm that
you're describing, the broader digital realm, you're absolutely
right. It is a very complicated space. But for these regulated
prediction markets, what they're doing is using new technology
to access a very old type of exchange of a swaps market that
has been around for 100 years. Has been regulated at the State
level, then to the Federal level with the creation of the CFTC.
So this is a time-honored set of things with new contracts
offered with a new piece of technology. And with that, we do
have struggles of how it develops, and the rulemaking regime
that is ongoing at the CFTC is very important to get right so
we do have the best consumer protection available and possible.
Senator Blackburn. Thank you. Senator Hickenlooper.
Senator Hickenlooper. Thank you, Madam Chair. Dr. Levant,
I've got a couple questions for you. The obviously 35 states,
including Colorado and Tennessee, prohibit gamblers from
borrowing money to make wagers. And these rules exist to
protect consumers so they don't end up trapped in a cycle of
debt and dealing with their addiction and paying off loans.
Kalshi recently asked the CFTC for approval to offer its
consumers these same admittedly risky loans so they can place
bets using money they don't have. This week we sent a letter to
the CFTC urging them to reject Kalshi's application.
Based on your experience working with people affected, you
know, by problem gambling, is it dangerous for consumers to
borrow money to bet on prediction markets?
Dr. Levant. It's extremely dangerous. No one should be
borrowing money to gamble with. Period. In addition to that, I
will tell you who does borrow money to gamble: Addicts borrow
money to gamble, and people prone to addiction borrow money to
gamble.
Senator Hickenlooper. Thank you. I agree with that. Let me
also ask you, since I've got you on the mic, comeback programs,
often referred to as VIP retention or win-back, generally are
used to reactivate lapsed accounts. They do so by flagging
accounts for aggressive re-enrollment, often highlighting their
previous big wins, that same addictive juice that is almost--
for some people is almost unavoidable, or irresistible, I
should say.
When utilized on players who have proactively blocked
themselves from the app, which they call self-exclusion, these
tactics are, you know, highly controversial. I think in some
cases they are--they are illegal. I mean, self-exclusion should
be, to my understanding, irreversible, and it should last six
months or to a lifetime, whatever someone makes that decision.
Shouldn't they be protected from this type of advertising?
Dr. Levant. Self-exclusion, unfortunately, is a state-by-
state-by-state matter. We don't have a Federal self-exclusion.
I will share with you two real-life events. One just happened
last week. A client who had gone on a one-year self-exclusion,
took this person quite a while to get to the point to have the
courage to go on the one-year self-exclusion. And at 40 seconds
past the hour of the exact one year, this client received an e-
mail that was offering them a welcome back opportunity and a
welcome back bonus. And when I looked at the fine print on the
offer, it was tailored to their player number that they had had
before.
I will also--and I'm happy to make this available to the
committee--I brought with me today the copy of an e-mail that a
client of mine received. This client was not on self-exclusion,
but they had been a very active gambler and for six weeks
didn't make a bet. They were in treatment, they didn't make a
bet. About six weeks later, they received an e-mail from what
is labeled the DraftKings VIP Comeback Series. And it starts
with, ``I've got some exciting news for you. Your account has
caught our eye, and we're thrilled to extend an invitation.''
And it goes on from there. That is as predatory as it gets.
And if this were another addictive product, if this were
alcohol or tobacco, we'd shut it down instantly if a bar was
exhibiting that type of predatory behavior. In gambling, they
call them VIP programs. Yet another reason Congress needs to
step in and create minimum Federal safety standards and stop
this from happening, because it's ruining lives, it's ruining
families.
Senator Hickenlooper. Well, I think the ultimate--the goal
should be that the industry reaches out and helps us establish
those standards instead of avoiding that.
Dr. Levant. I suppose in nirvana, yes, but as I pointed out
earlier Mr. Miller and his organization, on their website, they
specifically state that the Federal involvement in sports
gambling is--I believe the words are--a non-starter. So when an
industry demonstrates an unwillingness to regulate itself, and
it's an addictive product, most respectfully, that's where
Congress has to step in.
We've seen this before with tobacco. We've seen it with the
opioid industry. We have an opportunity to get in front of this
now. We can't wait for the industry to do it.
Senator Hickenlooper. I won't speak for the Chair, but I
think this hearing qualifies as a starter. Ms. Thomas, thank
you for all your work on this. And many states like Tennessee
have created regulations on gambling advertisements to ensure
that consumers are protected. Can you please outline--and here
we are talking about some of these again, Dr. Levant referred
to this as predatory advertising--can you just describe some of
the advertising guardrails and positive impact that they've had
on consumers?
Ms. Thomas. Yes, thank you. So first of all, I believe that
the issue he was speaking to goes to not only advertising but a
responsible gaming problem.
Senator Hickenlooper. Absolutely.
Ms. Thomas. And in our state, we require our operators to
provide a written responsible gaming plan, training outline,
the mechanics by which they oversee that, RG, and data about
who and how many--not who, but how many they've excluded and
what steps they've taken. Part of their plans--and I can tell
you that every operator in Tennessee, as part of their plans,
has in there that they will not market to anybody who was ever
on an exclusion list. So that is a very positive thing.
Otherwise, by statute, we have--obviously, we can't
advertise to minors, our office receives all advertising terms
and promotions. There is disclosure about 1-800-GAMBLER and 1-
800-RESET, which are gambling helplines, and individuals can
call those and be directed to assistance within Tennessee.
I also would like to touch on the fact that we spoke about
a lot of predatory behavior targeting really young minors, 10th
graders, I think the Chairman said. I see so much of that with
illegal sportsbooks, and our office has spent so much time and
effort targeting those, and especially working with Google and
Apple to get any illegal apps off the store so that they can't
target minors.
Senator Hickenlooper. Well, thank you, and I'll yield back
to the Chair, but I feel that all five of you are willing and
engaged to make--to fix some of these serious glaring problems,
and look forward to working with the Chair to provide us a
sense of urgency. These are real people's lives that are being
negatively impacted right now.
Senator Blackburn. And I thank all of our members that have
been here today, and I thank our witnesses. You've been an
excellent panel. This does allow us to start to build where we
should move in regulation and also looking at the division
between what should be Federal and what should be State and
preserving those States' rights in order to move forward with
this.
I will have to say Chairman Cruz, who's no longer here,
talked about how big the football Friday nights are in Texas.
But I would like to point out for the record that Texas finally
gave in and joined the SEC, which is the greatest football
conference. So they finally saw the light, and they're going to
join with the SEC.
I do want to remind you all that members of the panel are
going to have until May 27 to submit questions. I will remind
you that you need to respond to those within 7 business days.
So that's going to give you till the close of business on June
10 to submit your responses to the questions for the record.
You've done a superb job in helping us establish this
baseline. We are grateful for your time. At this time, hearing
adjourned.
[Whereupon, at 12:05 p.m., the Subcommittee was adjourned.]
A P P E N D I X
Prepared Statement of Derek Longmeier, President of the Board of
Directors, National Council on Problem Gambling
Dear Chairwoman Blackburn, Ranking Member Hickenlooper, and Members
of the Committee:
Thank you, Chairwoman Blackburn and Ranking Member Hickenlooper,
for holding this important hearing. I write on behalf of the National
Council on Problem Gambling (NCPG), the sole national advocate for
those suffering from problem gambling and their loved ones, to submit
this testimony regarding sports betting, game integrity, and problem
gambling in the United States.
NCPG's mission is to lead awareness and advocacy efforts to reduce
gambling harm. Our vision is to advance wellbeing by minimizing harm
from gambling problems. Since NCPG was founded in 1972, we have
remained neutral, neither for nor against legalized gambling, and
completely nonpartisan. NCPG members include 36 state affiliate
chapters and a wide variety of individuals and organizations--from
counselors, prevention specialists and researchers to people in
recovery from gambling problems as well as treatment clinics, gambling
operators and vendors, regulatory authorities, sports leagues and state
human services agencies. We speak on behalf of those who suffer from a
gambling addiction and for those in recovery who must remain anonymous.
Problem Gambling and its Overlap with Sports Integrity
Problem gambling or gambling addiction is characterized by
increasing preoccupation with and loss of control over gambling and
continued gambling despite serious negative consequences. Gambling
addiction (or gambling disorder) is a recognized mental health
condition in the Diagnostic and Statistical Manual of Mental Disorders,
5th Edition. Gambling problems are highly co-occurring with substance
abuse and other mental health problems. In fact, gambling addiction has
the highest rate of suicide of any addiction, and the estimated annual
social cost to families and communities from gambling-related
addiction, bankruptcy and crime is $14 billion.
NCPG has concerns about the impact of gambling on the health of
athletes, as nearly all of the limited research that exists indicates
that elite athletes are more likely to be at risk for gambling
addiction.\1\ This is not surprising given that data consistently shows
athletes are gambling at high rates, often on sports. One study from
Europe found that 57 percent of professional athletes gambled on sports
in the past year.\2\ In addition, athletes tend to be competitive, and
more willing to take risks, which are known risk factors for developing
a gambling problem.\3\
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\1\ Hakansson A, Durand-Bush N, Kentta G. Problem Gambling and
Problem Gaming in Elite Athletes: a Literature Review. Int J Ment
Health Addict. 2021 Dec 1:1-17. PMID: 34867124; PMCID: PMC8634748.
\2\ Grall-Bronnec M, Caillon J, Humeau E, Perrot B, Remaud M,
Guilleux A, Rocher B, Sauvaget A, Bouju G. Gambling among European
professional athletes. Prevalence and associated factors. J Addict Dis.
2016 Oct-Dec;35(4):278-290. Epub 2016 Apr 25. PMID: 27111296.
\3\ Curry, T. J., & Jiobu, R. M. (1995). Do motives matter?
Modeling gambling on sports among athletes. Sociology of Sport Journal,
12(1), 21-35.
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Preventing and treating gambling addiction among players protects
their health and preserves the integrity of the game. Multiple
instances of professional athletes intentionally compromising game
integrity have stemmed from the athlete having a serious gambling
problem and needing to make extra money to feed their addiction or
relieve them of obligations to their bookie.\4\ Professional sports
organizations, as well as the NCAA, should, therefore, provide
comprehensive gambling addiction prevention and education programs to
all players and team personnel. In addition, however, both the state
and Federal government have a role to play in ensuring citizens are
exposed to responsible gambling education and have access to resources
should they develop a gambling problem.
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\4\ See e.g., ESPN News Services, Lawyer: Jontay Porter was `in
over his head' with Gambling Addiction, available at: https://
www.espn.com/nba/story/_/id/40300820/fourth-man-arrested-betting-
scheme-involving-jontay-porter
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Gambling and Problem Gambling are Not Just State Issues
Since the Supreme Court struck down the Professional and Amateur
Sports Protection Act (PASPA) in 2018, 39 states and the District of
Columbia have legalized sports betting either at brick-and-mortar
locations or online and on mobile devices. This has proven to be the
largest and fastest expansion of gambling in our Nation's history. All
but two of the Senators on this Subcommittee have legal sports betting
in their state, whether it be in-person or mobile, whereas none did in
2018. For all Senators on this Subcommittee, whether their state has
legalized sports betting or not, your constituents are now exposed to
ads for sports betting frequently on broadcast television, radio and
podcasts, online, and in print. In addition, sports event contract
derivatives offered on prediction markets have emerged over the past
year-and-a-half as more than a fringe activity for those who choose to
gamble, and are currently legal nationwide, even in states that have
not legalized sports betting. Betting, using traditional sports books
and now prediction markets, is an engrained component of college and
professional sports.
The unprecedented expansion of sports betting and the recent
emergence of event contract derivatives on sporting events highlights
that gambling is a national issue, no longer just a state one. Problem
gambling is also a national public health issue. While the Federal
government is now regulating sports betting via prediction markets
overseen by the Commodity Futures Trading Commission (CFTC)--there is
no Federal spending outside of the military context whatsoever on
preventing or treating gambling addiction, programs that could help
players before they get into a situation where they intentionally
compromise game integrity. Put another way, states receive no support
for combatting the disease of gambling addiction from any Federal
health agencies. This is why passing the bipartisan Providing
Opportunities for Individauls in Need of Treatment and Support (POINTS)
Act is the single most important action Congress can take to address
the negative impacts of expanded sports betting and legalized gambling
in general.
Unregulated Legal Gambling
NCPG takes no stand and makes no argument as to whether trading
event contract derivatives on sports does or does not legally
constitute gambling. However, from our over 50 years of experience in
the field, expertise in problem gambling, and conversations with
researchers, clinicians, and individuals in recovery, we are certain
that trading event contract derivatives for most retail customers is
functionally gambling. Trading event contract derivatives includes the
three elements of gambling. These are: Consideration (customer must use
money or something of value to participate), Chance (the result of the
contract is not 100 percent certain as the event has not occurred), and
Prize (the customer will earn more money or value than they risked if
they are successful).
Any activity that is functionally gambling, including trading event
contract derivatives, can cause gambling harm to individuals and their
loved ones. It makes no difference to NCPG what the activity is legally
called, whether it be trading or gambling, we know that it is
functionally gambling and, therefore, must be regulated with
substantially similar protections to what we see states and tribal
governments implement with respect to traditional gambling. NCPG is
neutral as to the legalization of gambling, but we are not neutral as
to the regulation of gambling. Thus, we urge Congress to ensure this
activity is thoroughly regulated to protect all customers.
In April, NCPG submitted a 12-page public comment to the CFTC's
proposed rulemaking for prediction markets.\5\ In it, we detailed the
consumer protections that we believe must be included in any gambling
app, whether it be traditional sports betting regulated by a state or
prediction market trading regulated by the CFTC. NCPG believes the CFTC
must include requirements in the rules for robust responsible gambling
standards that prioritize customer health for all platforms offering
event contract derivates to retail customers. The CFTC should look to
NCPG guidelines of best practices for Internet gambling operators and
regulators known as the Internet Responsible Gambling Standards (IRGS).
Although originally written for traditional gambling, the IRGS is
almost entirely applicable to event contract derivatives and prediction
markets, and NCPG is currently working to make the document completely
applicable. These recommendations include things like the encouragement
and ability for customers to set personalized time and budget limits
and easy-to-access time-out and self-exclusion programs. Other topics
covered include but are not limited to: a corporate commitment from the
operator to responsible gambling; easy access to help via the National
Problem Gambling HelplineTM (1-800-MY-RESET), responsible
advertising that does not target vulnerable populations, and setting
the age to participate at 21 years old. The IRGS serves as a roadmap
for the CFTC, Congress, and prediction market platforms to prioritize
customer health and ensure the activity is offered, promoted, and
conducted responsibly. We encourage you to read the full public comment
submitted to the CFTC.
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\5\ See here: https://comments.cftc.gov/PublicComments/
CommentList.aspx?id=7654&ctl00_ct
l00_cphContentMain_MainContent_gvCommentListChangePage=1
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The widespread promotion and access to prediction markets will lead
to gambling problems for some individuals. Participation puts an
individual at risk for developing a gambling problem. Given this, we
urge Congress to ensure trading event contract derivatives is regulated
using the IRGS in order to prioritize player health and safety.
Problem Gambling is in Every State and Congressional District
Available evidence points to increases in gambling problems among
Americans. Although there has not been a nationwide gambling addiction
prevalence survey in decades, most states that have conducted
prevalence surveys are seeing their rates of gambling problems
increasing. For example, in Indiana, a 2022 survey found that 2.3
percent of adults were classified as having a gambling disorder.\6\ The
same survey just two years later found that the number of adults
classified as having a gambling disorder had increased to 3.4
percent.\7\ In addition, in states where studies have not been able to
conclude whether overall prevalence rates have increased, they are
finding high rates of gambling problems overall. A 2023 study in New
Jersey found that ``the overall rate of high-risk problem gambling,
which best correlates to gambling disorder, was just under 6 percent,
nearly three times the rate in a majority of population surveys in the
United States and abroad.'' \8\
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\6\ Jun, M., Lay, M., Reynolds, D., & Lee, J. (2023). Adult
Gambling Behaviors in Indiana--2022. Bloomington, IN: Prevention
Insights.
\7\ Jun, M., Lay, M., Reynolds, D., & Lee, J. (2025). Adult
Gambling Behaviors in Indiana--2024. Bloomington, IN: Prevention
Insights.
\8\ Nower, L., Stanmyre, J.F. & Anthony, V. (2023). The Prevalence
of Online and Land-Based Gambling in New Jersey. Report to the New
Jersey Division of Gaming Enforcement. New Brunswick, NJ: Authors.
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As we have learned from my home state of Ohio's gambling prevalence
surveys, there is a correlation between increased access to gambling
and increased rates of problem gambling. In 2012, prior to the
legalization of casinos and racinos, 5 percent of Ohioans were
considered at-risk for developing a gambling problem.\9\ Then, in 2022,
after casinos and racinos had been legalized, and there was expansion
of gambling through the legalization of daily fantasy sports, e-bingo
slot machines, and keno, the survey showed that 19.8 percent of Ohio
adults were at-risk for developing a gambling problem.\10\ This
represents approximately 1.8 million Ohio adults. Importantly, the 2022
Ohio Gambling Survey, conducted by the Ohio Department of Behavioral
Health, was completed before the launch of legal sports wagering in the
state. Since that survey, Ohio's gambling landscape has continued to
rapidly expand through legalized sports wagering, offshore unregulated
betting sites, and now the emergence of event contract derivatives
offered on prediction market platforms. We eagerly await the 2027 Ohio
Gambling Survey to see the current rates for those at-risk for a
gambling problem.
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\9\ Survey Available at: https://dbh.ohio.gov/static/Portals/0/
assets/FamiliesChildrenandA
dults/Get%20Help/Problem%20Gambling/2012SurveyofAt-
RiskandProblemGamblingPrevalence
amongOhioans.pdf
\10\ Survey Summary Available at: https://dbh.ohio.gov/static/
learnandFindhelp/gethelpnow/
problem-gambling/2022-Ohio-Gambling-Survey-Highlights_10182023.pdf
---------------------------------------------------------------------------
NCPG works closely with treatment providers and individuals in
recovery from gambling addiction and continue to hear their concerns
about the rise of gambling-related problems. NCPG's 2024 National
Survey on Gambling Attitudes and Gambling Experiences (NGAGE) revealed
troubling trends, including that the risk for gambling problems is
concentrated heavily among young male online sports bettors. In 2024,
24 percent of fantasy sports bettors and 17 percent of traditional
sports bettors met at least one criterion for problematic gambling
behavior.
While sports betting and prediction markets continue to garner
recent public attention, NGAGE shows most Americans did not place a
sports bet in the past 12 months. It remains important to recognize
that problematic gambling behavior extends well beyond sports. The most
significant predictors of risk identified in 2024 include participation
in many different gambling activities, agreeing that gambling is a good
way to make money, participation in sports betting (either traditional
sports betting or fantasy sports), and being male and/or under the age
of 35. However, we cannot determine the degree that these factors cause
problem gambling, especially as they are often highly correlated to one
another. These complex factors demand a broader national response,
something the Federal government should lead on.
Public Health Response
Public health is the science of protecting and improving the health
of communities and populations to reduce disease and improve health in
communities. A public health approach uses a combination of science and
social techniques and involves partnerships with communities, health
and social services, industry, academia, and the media. We must look
intently but critically at other countries' policies to ensure our
solutions are embedded in our Nation's cultural, political, and
economic systems. In the same way it has become part of our cultural
ethos not to drink and drive, we can make gambling in a responsible way
the norm. We recognize that state and tribal governments have
historically overseen gambling in accordance with legal precedent. At
the same time, emerging technology has created a way to gamble that is
currently overseen by the Federal government. NCPG will continue
partnering with all levels of government and all other stakeholders as
we all work towards solutions that minimize gambling-related harm.
States Have Not Sufficiently Invested in Problem Gambling Services
Many state governments have never invested in their problem
gambling programs or broad public health infrastructure. In May 2024,
the National Association of Administrators for Disordered Gambling
Services (NAADGS) reported that $134M in public funding had been
invested in state problem gambling programs in 2023, a historic high.
Yet, that still represents only 50 cents per capita. To put it another
way, for every dollar states have generated from commercial gambling,
.0009 cents were invested in problem gambling services. It is critical
that every state has robust and well-funded gambling addiction
prevention, education, and treatment services.
Public Health is a shared responsibility between the states and
Federal government. Yet, there are currently no Federal funds dedicated
to addressing gambling addiction in the United States outside of the
military context, despite the Federal government profiting
significantly from taxes on both gambling winnings and sports bets.
NCPG has long said that all who profit from sports betting are
ethically obligated to devote a percentage of their profits to gambling
harm reduction, and the Federal government is no exception--the Federal
government profits from legalized sports betting. Since the 1950s, the
Federal government has levied an excise tax of 0.25 percent on all
money wagered on sports in the United States, equating to one penny in
tax for every 4 dollars wagered. According to NCPG estimates based on
publicly available data, the Federal excise tax on sports betting
currently generates $200-300 million a year. That money does not go
towards specific programs or services but is simply deposited into the
general fund.
Congress Can Pass Federal Funding
NCPG strongly supports HR 7875, The Providing Opportunities for
Individuals in Needs of Treatment and Support (POINTS) Act, introduced
by Erin Houchin (R-IN), Andrea Salinas (D-OR), Mariannette Miller-Meeks
(R-IA) and Troy Carter (D-LA). The POINTS Act is the first bipartisan
bill introduced in Congress to devote resources to preventing and
treating gambling addiction in nearly 15 years. The bill provides
critical funding to problem gambling programs that are the foundation
of responsible gambling initiatives. The bill is funded by dedicating a
portion of the Federal sports betting excise tax to grants aimed at
prevention, education, treatment, and recovery. The POINTS Act returns
to states and tribes a third of the sports betting excise tax revenue.
By dedicating these funds to mitigating the costs of gambling
addiction, NCPG estimates that every dollar spent to prevent and treat
gambling problems will save state governments at least two dollars in
gambling-related criminal justice, bankruptcy, and healthcare costs.
One of the most significant benefits of the POINTS Act is the
potential for increased access to treatment for individuals struggling
with gambling addiction. By allowing states to apply for funding for
state health departments they will be better able to address gambling
addiction through programs that best resonate with their unique
communities. The POINTS Act will help ensure those in need have access
to the support and resources necessary to buttress responsible gambling
programs. The POINTS Act does not increase taxes; it simply sets aside
a funding stream for problem gambling prevention and treatment.
NCPG believes that passing the POINTS Act is the most important
first step that the Federal government can take to enshrine gambling
addiction as a matter of public health. It would provide the first-ever
dedicated Federal funding for programs to prevent and treat gambling
addiction. By raising the bar in states that apply for and receive
grants, it would give athletes, as well as all individuals, better
opportunities to learn about problem gambling and have access to help
before they make a disastrous decision.
Harm Also Comes from Black Market Sites
Even as legal sports betting expands at the state and Federal
level, there is still a vast amount of gray and black-market gambling
and sports betting occurring in each and every state, resulting in
considerable confusion among consumers. Young men (including athletes)
on college campuses are often bombarded with offers to gamble on these
sites. Many of these sites advertise in traditional media and use
celebrities to promote them. We call on Congress to ensure all sites
that offer gambling products are regulated, as well as to crack down on
illegal black-market sites.
Conclusion
It is clear to us that the expansion of gambling at the state
level, and now the Federal level, has not been uniformly accompanied by
appropriate--or in some cases any--funds to prevent or treat gambling
addiction. As a result, the existing public problem gambling prevention
and treatment services are insufficient in most states and nonexistent
in many. This impacts athletes across the Nation who are dealing with a
gambling problem and results in those athletes being more likely to
look at compromising game integrity as a solution to their problems.
The evidence that expanded sports betting has led to increased harm
on a national scale is clear. This rapid expansion and its accompanying
harm demands a public health response based on prevention, treatment,
and research partnerships amongst all stakeholders and everyone who
profits from legalized gambling. This includes the Federal government.
It is essential for Congress to come together and pass the bipartisan
POINTS Act. This practical and commonsense legislation is the single
most important action Congress can take to address the negative impacts
of expanded sports betting and legalized gambling in general. In
addition, Congress should work to ensure emerging platforms, like
trading event contract derivatives, are thoroughly regulated to
prioritize consumer health. On behalf of the 9 million Americans
directly suffering from gambling-related harm and the millions more who
are indirectly affected, including family members, coworkers, and
friends, we ask the Committee to enact lifesaving change by supporting
the passage of the first-ever Federal funding stream to prevent and
treat gambling addiction.
______
United States Senate
Washington, DC
March 5, 2026
Hon. Michael Selig, Chairman,
Commodity Futures Trading Commission,
Washington, DC.
Dear Chairman Selig:
We write to urge the Commodity Futures Trading Commission to
prohibit event contracts tied to U.S. military operations and
investigate whether any insider trading has occurred in connection with
recent military strikes against Iran.
Event contracts are derivatives that provide anyone with the chance
to wager on whether something will occur. Under the Dodd-Frank Act and
the CFTC's rules, event contracts that ``involve, relate to, or
reference assassination or war'' are prohibited. This category includes
event contracts that predict whether a U.S. adversary will no longer be
in office, such as Ayatollah Khameini in Iran, Nicolas Maduro in
Venezuela, or Miguel Diaz-Canel in Cuba. Because these leaders are so
entrenched and protected by vast military forces, their continued
leadership is perceived to be completely insulated from removal except
by armed intervention. As a result, event contracts referencing their
ouster ``involve or relate to'' war.
These contracts are so dangerous to the national security of the
United States and so offensive to U.S. values that they far outweigh
any legitimate risk-management purpose. Traders with inside information
that specific geopolitical events will occur or who can directly
influence such events can easily buy event contracts. Given the high
potential for insider trading, a surge in buying activity and a rapid
price increase can signal that the reference event will occur. Such a
pattern could tip off our adversaries that U.S. intervention is
imminent. By contrast, speculation in traditional financial instruments
that may be linked to geopolitical instability, such as oil, gold, and
currencies, do not send direct and specific signals that an attack in
one specific country is imminent. And the ability to trade event
contracts tied to violent geopolitical events could create financial
incentives for someone to actually commit violence for profit.
Activity in prediction markets regarding the war with Iran that
began on February 28 demonstrates how event contracts tied to U.S.
military operations are morally repugnant and provide no social
benefit. On offshore platform Polymarket, which is not regulated by the
CFTC, at least six wallets made more than $1 million in profits in just
hours by betting that the U.S. or Israel would strike Iran by that
date. According to reporting by Bloomberg, this activity is the
``hallmark'' of insider trading. An investigation is already underway
by Israeli authorities. On CFTC-regulated platform Kalshi, traders bet
whether Ayatollah Khameini would be ``out as Supreme Leader'' by that
date. Kalshi was still promoting the Khameini market as its ``featured
market'' throughout the day of military strikes, encouraging
speculation on war or death. After Khameini died, the platform
``clarified'' that payouts under the contract would be limited and
announced that some trading fees would be refunded. Despite these
efforts, many traders still apparently profited from price appreciation
after the strikes had started but before Khameini's death was
confirmed. The contract resolved when Khameini died, providing strong
evidence that this is a death market and that traders profited directly
from speculation on war.
Insiders face little risk of penalty under the CFTC's current
enforcement program. The insider trading laws for commodities markets
are underdeveloped compared to analogous laws in securities markets. To
date, the CFTC has not brought a single enforcement case involving
prediction markets. All the CFTC has done is issue a press release
highlighting two minor infractions that were addressed internally under
Kalshi's own terms and conditions, one involving $246.36 in illicit
profits and another involving $5,397.58. That signals a lax oversight
regime and will not deter insider trading.
To address dangerous national security, market integrity, and
immoral outcomes, the CFTC must enforce the law and immediately halt
trading in event contracts tied to U.S. military operations. Given the
high potential for insider trading and evidence that insider trading
did in fact occur in the ``Iran strike'' contract on Polymarket, we
urge the CFTC to investigate this matter on platforms that the agency
regulates and ultimately bring big cases to punish significant
wrongdoers.
We would appreciate your immediate action on this important matter
and look forward to your prompt reply.
Sincerely,
Jack Reed,
United States Senator.
John Hickenlooper,
United States Senator.
______
United States Senate
Washington, DC
Commodity Futures Trading Commission
May 18, 2026
Hon. Michael Selig, Chairman,
Commodity Futures Trading Commission,
Washington, DC.
Dear Chairman Selig:
We write to urge the Commodity Futures Trading Commission (CFTC) to
prohibit prediction markets from allowing margin trading in connection
with event contracts, particularly for retail lending.
On March 23, the National Futures Association granted approval for
an affiliate of Kalshi called Kinetic Markets LLC to offer its
customers margin trading as a futures commission merchant (FCM). Kalshi
still needs approval from the CFTC before offering this product. The
CFTC should not permit Kalshi, or any FCM or designated contract market
(DCM), to offer margin trading on event contracts. Margin trading
allows trading without full collateral. In other words, it allows a
bettor or investor to essentially borrow from the house and lose or
gain more money than they bet or invest. If the CFTC permits prediction
markets like Kalshi to allow margin trading, it would expose investors
and the economy to significant risk and undermine the longstanding
restrictions placed on betting by state gaming commissions.
Sports betting makes up a large portion of prediction markets. A
staggering 90 percent of event contracts listed on Kalshi's platform
involve sports betting. For Polymarket, sports betting makes up 40
percent of event contracts.
All platforms that permit consumers to bet on sporting events
should be subject to the same regulatory requirements. A sports betting
venue should not be able to escape the requirements imposed on it by a
state gaming commission simply by operating a prediction market
registered with the CFTC as a DCM. An event contract listed on a
prediction market that pays out when a particular sports team wins a
game is economically equivalent to a bet on the same team that is
placed at a casino or other gaming facility. State gaming commissions
have spent decades developing regulations covering consumer protection
and economic risk. Prediction markets pose the same risks to consumers
and the economy as traditional gambling and should be subject to the
same requirements.
This is particularly true with respect to limitations on the
provision of credit to consumers. Thirty-five states limit the credit
that gaming facilities may provide. In some states, such as Colorado
and Tennessee, gaming facilities are prohibited from providing any
credit to consumers to finance sports betting. Other states, like Rhode
Island, permit a gaming facility to provide a consumer with a line of
credit to finance sports betting only if the consumer meets certain
criteria, including thresholds for annual income, debt-to-income ratio,
prior credit history, and average monthly bank balance. There is
nothing about the structural difference between event contracts traded
on Kalshi versus traditional betting to justify permitting leverage for
one but not the other.
States limit the provision of credit by gaming facilities to
prevent consumers from taking on debt that they cannot pay back. These
rules ensure that bettors' losses are capped at the amounts that they
use to fund their accounts. Betting on a credit card can cause
customers to get trapped in a cycle of debt. Interest can quickly
accrue and balances can compound, resulting in customers losing even
more money than they bet. So, too, can betting with margin obtained
from a FCM or DCM. Even small price movements can lead to margin calls
and ultimately cause positions to become liquidated. Just like with a
credit card, margin can put the trader on the hook for more money than
they put down.
Significant levels of consumer debt, particularly in connection
with sports betting, are not only dangerous for consumers, they are
also detrimental to the broader economy. Online sports betting leads to
higher credit card balances, more frequent account overdrafts, and
fewer investments, particularly among already financially vulnerable
households.\1\ This problem will only grow if the CFTC permits
prediction markets to offer margin loans to consumers in connection
with sports betting on their platforms. Ultimately, the country will
bear the burden when consumers default on their debt and become less
economically productive due to a poor credit history and lack of
savings.
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\1\ Scott Baker et. al, National Bureau of Economic Research,
GAMBLING AWAY STABILITY: SPORTS BETTING'S IMPACT ON VULNERABLE
HOUSEHOLDS (Nov. 2024), https://www.nber.org/papers/w33108.
---------------------------------------------------------------------------
Moreover, prediction markets currently offer margin at levels that
are far riskier than permitted for traditional retail financial
products. Polymarket recently announced its intention to offer
perpetual futures contracts, which will provide investors with up to
10x leverage. This is significantly more than the 2x leverage that is
typically permitted for leveraged ETFs to retail investors in the
securities markets. The SEC recently denied applications for high-
leverage ETFs offering 3x and 5x leverage, less than half of the
leverage that Polymarket plans to offer consumers. The highly leveraged
products on prediction markets are dangerous for consumers. If
prediction markets are permitted to offer margin trading to retail
bettors and investors, it would expose consumers to financial risks
that market regulators have long determined to be unsuitable for retail
products.
The CFTC should prohibit prediction market platforms from providing
margin loans to their users because it would undermine the credit
limitations imposed by states, resulting in harm to consumers and the
economy. Even if the CFTC limits margin trading, any amount of
permissible margin trading would supersede decisions made by states
with more restrictive limitations. The CFTC should leave it to state
governments to continue to determine the appropriate amount of credit,
if any, that consumers may receive when engaging in sports betting and
other gaming activities on prediction markets or in casinos.
Sincerely,
John Hickenlooper,
United States Senator.
Jack Reed,
United States Senator.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Bill Miller
Prediction Markets
Online sportsbooks like FanDuel and DraftKings are required to
comply with state gambling laws, which typically include a variety of
consumer protections like advertising restrictions, requiring users to
be at least age 21, and mandatory self-exclusion lists. But prediction
markets, like Kalshi and Polymarket, contend their sports ``event
contracts'' are federally regulated financial swaps that do not need to
follow state gambling laws.
Question 1. Are there any practical differences between sports bets
at online casinos and sports event contracts on prediction markets?
Answer. There is no meaningful difference. And Americans agree,
with 81 percent believing that ``sports event contracts'' are gambling.
In either offering, individuals place money on the outcome of sporting
events or player performances with the opportunity to profit if their
wager is correct. ``Sports event contracts'' mirror traditional
sportsbook offerings, including futures, single-game outcomes, player
props, and multi-leg style products.
CFTC Authorities
Under the Commodity Exchange Act, the CFTC is authorized to ban
prediction markets from offering ``gaming'' or any ``activity that is
unlawful under any Federal or State law.''
Nevertheless, the CFTC is thus far choosing to allow prediction
markets to offer sports event contracts that appear indistinguishable
from sports betting.
Question 1. Do you believe that the CFTC has the current statutory
authority to prohibit sports betting on prediction markets?
Answer. Congress expressly granted the CFTC authority under the
Commodity Exchange Act to prohibit event contracts involving ``gaming''
or activities unlawful under Federal or state law. Further, the
Commission adopted Rule 40.11 to implement that directive and stated
that the prohibition on gaming-related contracts was intended to
prevent gambling through the futures markets and protect the public
interest.
For years, the Commission itself recognized that ``sports event
contracts'' raised concerns under Rule 40.11, and as recently as 2025,
the CFTC acknowledged publicly that ``sports event contracts'' may
constitute gaming and initiated review processes on that basis.
In 2024, Kalshi itself declared in Federal Court that congressional
intent was clear that sports betting should NOT be treated as a
derivative:
``An event contract thus involves ``gaming'' if it is
contingent on a game or a game-related event. The classic
example is a contract on the outcome of a sporting event; as
the legislative history directly confirms, Congress did not
want sports betting to be conducted on derivatives markets.''
Question 2. Do you think the CFTC should use that authority to
prohibit these offerings?
Answer. Yes. ``Sports event contracts'' are functionally
indistinguishable from sports betting and have created a national
backdoor sports betting market. Sports wagering should only occur with
state and tribal licensed operators.
Our analysis shows that the Prediction Markets have siphoned more
than $1 billion in sports betting tax revenue from states and tribes.
This lost revenue funds critical projects in local communities and will
continue to balloon if prediction markets are allowed to continue
evading state and tribal taxes and regulations.
Question 3. If so, why do you think the CFTC is choosing not to
exercise its existing authority to rein in sports betting on prediction
markets?
Answer. The CFTC has shifted significantly from its prior
interpretation and enforcement approach regarding gaming-related event
contracts. Rather than maintaining the longstanding understanding that
gaming contracts are prohibited under Rule 40.11, the Commission has
increasingly treated so-called ``sports event contracts'' as
permissible financial products despite substantial objections from
state regulators, tribes, attorneys general, sports leagues, and
members of Congress. The Commission has also undertaken rulemaking and
litigation positions that suggest it is attempting to redefine the
scope of its authority in this area rather than defer to Congress or
the courts to resolve the issue.
Tribal Gaming
As I discussed at the hearing, the Indian gaming industry supported
more than 680,000 jobs last year and provides economic support for
countless families. The American Gaming Association and the Indian
Gaming Association recently sent a letter to Congress calling for
legislation that would make clear that sports betting cannot take place
on prediction markets ``under the guise of event contracts.''
Question 1. What can Congress do to better protect tribal gaming
from prediction markets?
Answer. Congress can reaffirm that sports betting and casino-style
gambling may not be conducted through CFTC-regulated prediction markets
under the guise of event contracts.
The existing state and tribal gaming framework reflects decades of
work at the state level based on Federal law, including the Indian
Gaming Regulatory Act, which recognizes tribal sovereignty and
carefully balances the relationship between tribes, states, and the
Federal government. Prediction market platforms offering nationwide
sports betting products undermine those frameworks and tribal
exclusivity agreements without providing the protections,
accountability, or oversight required of regulated gaming operators.
Prop and Micro Bets
The sports-betting scandals at the center of the Committee's
bipartisan investigation all involve prop bets--such as whether an
individual pitch will be a ball or strike.
In addition to posing significant integrity risks, research has
shown these bets are among the most addictive and pose particular risks
to younger Americans.
Question 1. Does the AGA acknowledge that prop and micro bets pose
unique risks to consumers, especially younger Americans?
Answer. Certain prop and micro betting products can present
heightened integrity and responsible gaming considerations due to their
rapid frequency and focus on highly specific in-game events or
individual player actions. That is precisely why these products are
offered within heavily regulated state and tribal gaming systems that
include integrity monitoring, age restrictions, responsible gaming
tools, self-exclusion programs, advertising standards, and ongoing
oversight by dedicated gaming regulators working alongside operators,
leagues, and law enforcement. The AGA supports ongoing discussions
between regulators and leagues on what wagers are being offered and
those that should be prohibited.
Importantly, these decisions should be made within established
state and tribal regulatory frameworks specifically designed to oversee
gaming--not through a system where operators can self-certify ``sports
event contracts'' and bring them to market without the extensive
review, consumer protections, and regulatory scrutiny required in legal
gaming markets.
Question 2. Are there any legislative reforms the AGA presently
supports to help mitigate the known risks posed by these types of bets?
Answer. The AGA supports maintaining sports wagering within the
established state and tribal regulatory framework, where regulators
already possess broad authority to approve, restrict, or prohibit
certain wager types based on integrity, consumer protection, or
responsible gaming concern. Those regulators continually evaluate these
products in consultation with operators, leagues, and integrity
monitors, and they have demonstrated they will take action when
concerns arise.
______
Response to Written Questions Submitted by Hon. Ben Ray Lujan to
Bill Miller
Question 1. What responsible gambling practices need to be
mandatory to protect customers online and help to prevent problem
gambling?
Answer. Responsible gaming protections are a critical component of
legal online gaming and sports betting. Operators are required to
implement robust age and identity verification, geolocation controls,
self-exclusion programs, deposit and wagering limit tools, employee
training, prominent responsible gaming messaging, and access to problem
gambling resources. Operators also maintain procedures for identifying
potentially risky player behavior and providing customers with tools
and resources to manage their play.
The AGA and its members maintain responsible gaming and responsible
marketing codes that incorporate many of these principles. Importantly,
state and tribal gaming regulators also impose extensive responsible
gaming requirements through licensing conditions, regulations, and
ongoing compliance oversight.
Question 2. Should all industry members be held to the Internet
Responsible Gaming Standards such as those developed by the National
Council on Problem Gambling?
Answer. The AGA strongly supports robust responsible gaming
standards and believes the National Council on Problem Gambling has
played an important role in advancing responsible gaming best practices
and public awareness.
Many of the principles reflected in the NCPG's Internet Responsible
Gaming Standards are incorporated into the AGA's Responsible Marketing
Code, as well as into the regulatory requirements imposed by state and
tribal gaming regulators across the country. These include employee
training, responsible gaming tools, self-exclusion programs, consumer
education, and policies designed to protect vulnerable individuals. The
AGA also supports continued investment into research and academic
reviews of responsible gaming and problem gambling programs and
messages. State and tribal regulators are best positioned to determine
how these standards are applied and enforced within their
jurisdictions.
______
Response to Written Questions Submitted by Hon. Amy Klobuchar to
Scott Sadin
Sports Betting and Game Integrity
Some integrity experts have cautioned that some highly specific
wagers tied to individual player actions during games may be especially
vulnerable to manipulation because a single player can potentially
influence the outcome without affecting the overall game result.
Question 1. From your perspective, are certain categories of
proposition bets or event contracts inherently harder to protect from
insider abuse?
Answer. Senator Klobuchar--thank you for the question.
I agree with the framing of your concern that highly specific
markets tied to individual player actions may be more vulnerable to
manipulation because a single player can potentially influence the
market outcome without affecting the overall contest result. IC360
would consider the single point of failure and the psychological effect
of spot-fixing in this scenario as indicia of heightened risk. We
believe that increased attention, surveillance and integrity-related
engagement should occur around these markets.
I would add, however, that market vulnerability is often a nuanced
analysis that encompasses additional characteristics. Through IC360s
monitoring and investigative work, we have come to think about
integrity vulnerabilities across three core behavioral and economic
pillars that we deem to be systemic variables.
The first pillar captures some of what you have described: a
single-actor point of failure in which a market can be entirely
compromised by the conduct of one individual and therefore carries
lower operational barriers to manipulation than markets requiring
coordinated action.
The psychological accessibility of spot-fixing raises a second
foundational risk factor because small, discrete in-game actions allow
a compromised actor to execute a corrupt action while rationalizing
that they are not jeopardizing their team's success. That psychological
accessibility makes spot-fixing a primary recruitment vehicle for
organized integrity threats.
While not relevant in the scenario you outlined, economic and
seasonal variation is a third foundational pillar for identifying
market vulnerability. This vulnerability scales inversely with athlete
compensation and competitive relevance, with lower-tier contests and
leagues in the latter stages of seasons (after competitive relevance
has potentially been lost) reflecting heightened risk.
The vulnerabilities you raised are real and significant, and our
analytical framework treats it as such--but it sits within a broader
risk picture that warrants the same attention.
Question 2. Are there safeguards you believe are currently missing
for these kinds of bets or contracts?
Answer. The integrity framework I described in my testimony is, in
our experience, functioning. However, as with any maturing system,
there are areas in which broader and deeper participant engagement
would strengthen the protections already in place. Rather than
safeguards I would describe as missing, I would offer three areas in
which increased engagement across the existing collaborative
infrastructure could yield incremental value.
The first is the willingness of licensed operators to surface a
broader and more inclusive set of integrity signals to their
independent monitors, and to engage consistently and in a timely manner
in responding to the alerts that are circulated across the ecosystem.
Although many operators are deeply engaged in this work today; more
consistent engagement across the broader operator population, in our
view, would yield meaningful integrity benefits.
The second is broader stakeholder participation in the prohibited-
bettor screening framework. Such infrastructure gives sports leagues,
operators, and regulatory bodies visibility into the population of
individuals subject to role-based wagering and transaction
prohibitions--athletes, officials, coaches, and other personnel--and
helps ensure those individuals are not transacting in markets where
they may possess inside information or have consistent access to exert
undue influence.
The third is consistent and robust integrity education for the
prohibited-individual population itself. Many consequential outcomes
across our integrity-related work can be traced back to a moment of
recognition by a person closest to competition. That recognition
depends on prior awareness of the rules that apply to them, the
patterns of bad actors, and the consequences of violating prohibitions.
Sustained investment in education across that population, across sports
and across competitive levels, is, in our view, foundational.
Each of these can be advanced through deeper engagement from the
same participants who, today, comprise the existing integrity
framework.
I appreciate the Subcommittee's continued attention to these issues
and welcome the opportunity to provide any additional detail that may
be useful.
______
Response to Written Question Submitted by Hon. Ben Ray Lujan to
Scott Sadin
Question. The Senate recently passed a resolution banning itself
from engaging in prediction markets. The House introduced a similar
resolution. Yes or no, should all government officials across all three
branches should be similarly prohibited from engaging in prediction
markets?
Answer. Senator Lujan--thank you for the question.
The specific prohibition you describe raises governance questions
on which I would defer to the Subcommittee and its colleagues.
From an integrity-monitoring standpoint, the broader principle is
that in any regulated market--financial markets the most familiar
analog--individuals with regular access to material non-public or
confidential information should operate within a framework of policies,
procedures, and surveillance designed to prevent the misuse of that
access.
We have found that the integrity case for applying a protective
framework is strongest when the at-risk population is clearly
identifiable. This is particularly true for groups of individuals who
have regular access to confidential information relating to a
particular set of markets. We actively assist in building and enforcing
these exact prohibitive frameworks across the integrity ecosystem.
I appreciate the Subcommittee's continued attention to these issues
and welcome the opportunity to provide any additional detail that may
be useful.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Patrick McHenry
Online sportsbooks like FanDuel and DraftKings are required to
comply with state gambling laws, which typically include a variety of
consumer protections like advertising restrictions, requiring users to
be at least age 21, and mandatory self-exclusion lists. But prediction
markets, like Kalshi and Polymarket, contend their sports ``event
contracts'' are federally regulated financial swaps that do not need to
follow state gambling laws.
One of your Coalition's biggest sponsors, Kalshi, marketed itself
as making ``sports betting legal in all 50 states.''
Prediction Markets
Question. How can your Coalition now claim prediction markets offer
meaningfully different products when Kalshi's own statements
acknowledge it offers ``sports betting''?
Answer. The mechanics are fundamentally different. In a sportsbook,
the house sets the odds and profits directly when customers lose. On a
prediction market exchange, contracts are certified to the CFTC and
participants trade them against one another. Both contracts and trading
are subject to extensive regulations, and exchanges earn small
transaction fees regardless of the outcome. Unlike a sportsbook, it has
no incentive to see users lose. That is a different business model with
different incentive structures and different regulatory obligations.
The Third Circuit Court of Appeals has held that sports event
contracts qualify as swaps and are governed by the Commodity Exchange
Act and Dodd-Frank, rather than gaming products subject to state law.
Coalition members are federally regulated by the CFTC, and comply with
applicable Bank Secrecy Act and KYC/AML obligations, and conduct real-
time market surveillance, which is the full suite of obligations
applicable to serious financial exchanges. Exchanges are required by
law to prohibit and police illegal, manipulative or abusive trading
activity. The trading of sports event contracts is a meaningfully
different activity operating under a meaningfully different legal
framework.
Question. Do you believe that the CFTC has the current statutory
authority to prohibit sports event contracts on prediction markets if
it wanted to?
Answer. A number of courts, including the Third Circuit Court of
Appeals--the highest court to have weighed in on the matter--have held
that sports event contracts are swaps governed by the Commodity
Exchange Act. The CFTC has applied its existing regulatory structure to
licensed prediction market exchanges, and is currently engaged in a
rulemaking process to establish more detailed standards to govern these
markets. The CFTC's rulemaking process is the appropriate venue through
which to resolve questions about which contract types should be
permissible. We support that process and welcome its outcome.
Washington State Attorney General's Lawsuit Against Kalshi
In the State of Washington, all legal gambling must take place
through Tribal casinos. In March 2026, Attorney General Brown sued
Kalshi for operating and advertising online gambling in the state.
Beyond violating our gambling laws, the complaint also highlighted
alarming consumer protection concerns.
This includes evidence Kalshi specifically targeted college
students under age 21. For example, the complaint contains evidence
that Kalshi paid college student influencers to promote their
platform--and at one point even tried to recruit a 15-year-old
videogame influencer to promote their brand.
Question. Does your Coalition think it's acceptable for prediction
markets to target 15-year-olds to promote their platforms?
Answer. No. All persons under 18 are prohibited from participating
on coalition member platforms, and coalition members do not target
minors in their marketing. Any advertising that inadvertently reaches
minors through other channels is targeted toward legal adults who can
lawfully access these platforms.
U.S.-based, federally regulated companies are accountable in ways
that unregulated platforms are not. If the concern is protecting young
people, the answer is a strong Federal framework with enforceable
standards, not driving users to unregulated platforms where no
protections exist.
______
Response to Written Questions Submitted by Hon. Amy Klobuchar to
Hon. Patrick McHenry
Consumer Protections
In your testimony you stated that consumer protection matters
deeply to the Coalition for Prediction Markets.
Question. What steps are Coalition members taking to address the
risks to consumers posed by gambling addiction?
Answer. We take addiction concerns seriously. Coalition members
have adopted a range of measures to support responsible use and protect
consumers who may be at risk, including:
Self-exclusion tools and deposit/spending limits that allow
users to set boundaries on their own activity;
Regarding sports event contracts, coalition members do not
offer in-play micro-bets tied to individual pitches or plays,
which are events more susceptible to manipulation and addiction
concerns;
Partnerships with problem gambling and responsible trading
resources--including Kalshi's membership in a new Financial
Services Category established by the National Council on
Problem Gambling, which is specifically tailored to the
dynamics of financial trading rather than traditional gambling;
Categorical prohibition on participation by anyone under 18,
with additional monitoring and guardrails to enforce that ban,
such as a portal for parents to verify their information is not
being improperly used by a minor to trade on an account;
Data sharing and coordination, where appropriate, with
responsible gaming organizations to develop best practices
tailored to the prediction market context.
It is also important to acknowledge the structural difference in
business models. In a traditional sportsbook or casino, the house's
revenue equals its customers' losses--the platform has a financial
incentive to keep losing customers engaged and to push addictive
behavior. In a prediction market, the platform earns a small
transaction fee regardless of outcome and does not profit from user
losses.
Any financial platform with significant retail participation
carries risks, and we are committed to continuing to develop resources
and safeguards appropriate to our platforms. We welcome engagement with
this Committee on what additional standards should apply.
Question. Does the Coalition have standards or guidelines for
proactive measures its members should take to step in when it
identifies users displaying addictive behavior?
Answer. To expand on our previous answer, coalition members have
implemented a range of proactive measures, including monitoring for
behavioral patterns that may indicate problematic use and providing
users with tools to manage their own activity, such as spending limits,
cooling-off periods, and self-exclusion options.
Kalshi's partnership with the NCPG is specifically oriented toward
creating a proactive framework for identifying and responding to
problematic trading behavior--recognizing that, as financial markets
have democratized and attracted more retail participants, the industry
has a responsibility to develop resources that meet users where they
are.
We would also note that a uniform Federal framework is the right
vehicle for establishing clear, enforceable industry-wide standards in
this area. Currently, state-by-state regulation results in significant
inconsistency: for example, under the state-by-state sportsbook system,
protections for self-excluded users are unevenly enforced and often
depend on which state someone happens to live in.
______
Response to Written Questions Submitted by Hon. Ben Ray Lujan to
Hon. Patrick McHenry
Question. The Senate recently passed a resolution banning itself
from engaging in prediction markets. The House introduced a similar
resolution. Yes or no, should all government officials across all three
branches be similarly prohibited from engaging in prediction markets?
Answer. We support clear and consistent rules prohibiting
government insiders from trading on material nonpublic information in
any market. Coalition member companies already prohibit trading by
anyone capable of influencing the outcome of a contract, including
Members of Congress on political contracts, protections that go well
beyond what Federal securities laws require.
On the broader question of whether elected officials and government
employees should be prohibited from participating in prediction markets
at all: that is a policy judgment for Congress and the relevant
branches to make, and we defer to those bodies on how to structure the
rules.
Question. Is there anything in current Federal law (the Commodity
Exchange Act, CFTC regulations, or any other statute) that would
prohibit a prediction market from listing event contracts on a high
school football game or a Little League World Series baseball game?
Answer. Coalition members do not currently offer contracts on high
school or youth sports events. We would support the CFTC explicitly
addressing this in rulemaking to provide clear, codified guidance.
Question. Do you believe that it is appropriate to list prediction
contracts on high school sports or events where the participants are
under 18?
Answer. Coalition members do not offer such contracts. We would
support the CFTC codifying a prohibition on such contracts as part of
its rulemaking, and we encourage that outcome.
______
Response to Written Questions Submitted by Hon. John Hickenlooper to
Hon. Patrick McHenry
In the hearing, I highlighted for you how the CFTC's self-
certification process works. I explained that under the CFTC Regulation
40.2,\1\ once exchanges declare that their contracts comply with the
Commodity Exchange Act (CEA) and Core Principles, if the CFTC does not
object, the market can go live in one day. In summary, it is common
knowledge that the CFTC's self-certification process allows federally
registered prediction markets to bypass lengthy government approval
before launching new event contracts.
---------------------------------------------------------------------------
\1\ https://www.ecfr.gov/current/title-17/chapter-I/part-40/
section-40.6
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Furthermore, as stated on the CFTC website\2\, because the CFTC
allows exchanges to self-certify, the agency places heavy emphasis on
post-launch oversight rather than pre-approval.
---------------------------------------------------------------------------
\2\ https://www.cftc.gov/IndustryOversight/ContractsProducts/
iongoing rulemaking is specifically designed to address how the
regulatory framework should be calibrated across the commodities and
derivatives markets and in light of ndex.htm
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You claimed during the hearing that the CFTC's process for
regulating prediction markets is sufficient because it is the same
process the CFTC uses to review the rest of the commodities
marketplace.
However, the CFTC's self-certification process for designated
contract markets (DCM) was designed for markets with very different
characteristics than the prediction markets. The self-certification
process used by DCMs to list derivatives contracts was designed for
transactions entered into by sophisticated institutional investors with
limited information asymmetry. This is very different from the retail-
oriented sports betting that occurs on the prediction markets. The CFTC
also needs sufficient time to ensure that no market manipulation has
occurred. 24 hours may be enough time to identify suspicious economic
trends in commodity futures markets, where market data is readily
available. But it is more difficult to effectively monitor sports
betting markets, where an individual or small group may easily
manipulate the outcome and evidence of such manipulation can be hard to
find.
Self-Certification Concerns
Question. Mr. McHenry, can you please explain in detail why you
believe that 24 hours is sufficient time for the CFTC to determine that
an event contract is not readily susceptible to manipulation? Please
also explain how the CFTC's existing self-certification process
adequately protects retail investors who do not have the information or
negotiating power that typically exists for the institutional investors
that traditionally participate in CFTC-regulated markets.
Answer. The self-certification framework is the same process used
across the commodities and derivatives markets and is paired with
continuous post-listing oversight. The CFTC retains full authority to
review and unwind contracts after launch. If the concern is that the
agency lacks adequate staffing to exercise that oversight effectively,
that is an argument for providing additional funding for the CFTC, not
for transferring jurisdiction to state gaming commissions that have
never regulated a financial derivative product. The Coalition supports
a fully staffed and adequately resourced CFTC, and we look forward to
working with Congress on legislative proposals, including the
bipartisan Prediction Market Act of 2026, to strengthen the agency's
capacity.
Question. Mr. McHenry, you also stated during the hearing that 24
hours is sufficient for the CFTC to review an event contract because
the CFTC has regulatory authority to remove or unwind contracts after
the fact if they identify fraudulent activity. However, given the
volume of event contracts, the large number of retail market
participants, and the speed with which event contracts resolve, there
is concern that, in practice, the CFTC would not have time to remove or
unwind contracts if it identified fraudulent activity. In the last two
years, how many event contracts listed on prediction markets has the
CFTC removed or unwound after identifying fraudulent activity?
Answer. The specific data on the number of contracts removed or
unwound by the CFTC in the last two years is information the CFTC
itself is best positioned to provide, and I would encourage the
Committee to direct that question to the CFTC.
The regulatory framework is not premised solely on the CFTC's post-
listing removal authority. Coalition member companies maintain real-
time market surveillance systems, file daily suspicious activity
reports with the CFTC, conduct know-your-customer and AML screening,
and have preemptively blocked categories of participants, including
athletes, coaches, referees, and league employees, from trading on
contracts tied to their sports. These are proactive, front-end
controls, not just after-the-fact remedies.
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