AGA Warns Prediction Markets Are Threatening US Sports Betting Growth

The American Gaming Association (AGA) has warned that the growth of prediction markets is diverting activity away from regulated sportsbooks, with legal betting on the 2026 NFL season forecast to show almost no year-on-year growth.

The AGA estimates that $29.5 billion will be wagered legally on the NFL during the season, only marginally higher than the $29.4 billion recorded a year earlier. The forecast covers preseason games, futures placed since March, the playoffs and Super Bowl LXI in March 2027.

AGA Estimates $1.3 Billion In Lost State Tax Revenue

The trade body said the stagnation comes despite the continued development of regulated sports betting across the US and attributed part of the slowdown to the rapid expansion of prediction markets offering sports-related event contracts.

According to the AGA, more than $1.3 billion in potential state gaming tax revenue has been diverted towards prediction markets since 2025. It argues that sports event contracts increasingly compete directly with products available through state-regulated sportsbooks.

The organisation highlighted activity among younger consumers as a particular concern, estimating that approximately $5.1 billion of Kalshi trading volume has come from users aged between 18 and 20. Customers in this age group are generally below the minimum age required to use regulated sportsbooks in the US.

Research from Optimove also indicated growing awareness of prediction markets among existing sports bettors. A survey of 926 US NFL bettors found that 84% were aware of prediction markets, while 60% said they intended to trade, buy or sell event contracts during the year.

Miller Describes Prediction Markets As ‘Backdoor Sports Betting’

AGA President and CEO Bill Miller described sports-focused prediction markets as “backdoor sports betting”, arguing that their expansion is making it more difficult for consumers to distinguish between state-regulated gambling and event contracts offered under a different regulatory framework.

“We’re excited for the NFL season to kick-off, as are millions of fans eager to engage with their favourite teams. Since the Supreme Court struck down the federal sports betting ban in 2018, legalised sports betting had seen tremendous growth,” Miller said.

“But this year is different. Since the widespread launch of backdoor sports betting on so-called ‘prediction markets,’ the growth of legal handle has stalled.”

Miller also criticised the way prediction market platforms position sports-related products, arguing that consumers are being encouraged to view them as investments rather than entertainment.

“Kalshi and other prediction markets say they don’t need to follow state- and tribal-regulated sports betting laws or pay state gaming taxes,” he added.

“Their defiance means consumers, including teenagers and students, placing bets without the protections, oversight, and accountability that the legal market provides.”

Prediction Markets Face Growing Gambling Industry Scrutiny

The AGA's intervention comes as prediction markets face increasing scrutiny over whether sports event contracts should be treated as financial products or regulated gambling.

The organisation's latest forecast suggests legal NFL wagering growth has stalled after years of expansion following the 2018 Supreme Court decision that opened the door for individual states to legalise sports betting.

With prediction markets attracting a growing share of sports-related trading activity, the AGA is pushing for greater scrutiny of platforms it believes are competing directly with licensed sportsbooks without being subject to the same state and tribal gambling regulations.