# Sports Betting Wagering on the outcome of sporting events, or on things that happen inside them: a player's points, a single pitch. For most of the last century it was legal at scale only in Nevada. In eight years it has become a national industry worth tens of billions of dollars a year, and since 2025 a second, federally regulated version of it has grown up beside the first under the name of [[Prediction Markets]]. This page covers the gambling side of the story: how the legal market was built, how prediction markets route around it, and what the boom has cost. The health side is on [[Problem Gambling]]. ## How it became legal - **1992 — PASPA.** The Professional and Amateur Sports Protection Act barred states from authorizing sports betting, grandfathering Nevada and a few states with existing lotteries or pools. - **May 14, 2018 — [[Murphy v. NCAA]].** The Supreme Court struck PASPA down as unconstitutional commandeering of the states. Regulation passed to the states. - **2018–2026.** States legalized one by one, most with mobile apps. A 2024 academic study counted 38 states with some form of legal sports betting; the AGA counts about 30 states plus D.C. with legal *online* betting in 2026. **California and Texas, the two largest states, still have no legal sportsbooks.** ## How big it is From the [[American Gaming Association]]'s figures for 2025 (commercial operators only): | Measure | 2025 | Change from 2024 | |---|---|---| | Sports betting handle (amount wagered) | **$166.94 billion** | +11.0% | | Sports betting revenue (kept by operators) | **$16.96 billion** | +22.8% | | All commercial gaming revenue | $78.72 billion | +9.2% | | Gaming tax revenue | $18.09 billion | +15.1% | Revenue grew twice as fast as handle: operators kept a bigger share of every dollar wagered. ## The end-run: sports as "event contracts" The state system rests on licensing, taxes, a 21-and-over age floor in most states, and, in many states, compacts with tribes. [[Kalshi]] and [[Polymarket]] skip all of it by listing sports results as **event contracts** on exchanges registered with the [[CFTC]]. Their legal theory is that these contracts are "swaps," that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps, and that [[Federal Preemption]] therefore shuts the states out. The practical result is a sportsbook that operates in California and Texas, takes 18-year-olds, and pays no state gaming tax. The AGA estimates prediction markets have already diverted **more than $500 million** in potential state sports-betting tax revenue. The fight is now a three-way war: - **The states sue the platforms.** Nevada won a preliminary injunction shutting Polymarket down in the state (June 2026). A federal judge in Michigan denied Polymarket an injunction against the state, ruling that sports event contracts are not swaps and that the Commodity Exchange Act does not preempt state gambling law (June 2026). New York sued Kalshi and then, on September 24, 2026, Polymarket. - **The platforms sue the states.** Polymarket has sued Massachusetts, Michigan, Minnesota and New York. - **The regulator sues the states** (tracker: [[CFTC v. Arizona]]). On April 2, 2026 the CFTC under [[Michael Selig]] sued Illinois, Arizona and Connecticut after they sent cease-and-desist letters to prediction markets. It added New York on April 24. By late June it had filed **nine** such suits in all; RotoWire's tracker lists the other five as New Mexico, Minnesota, Rhode Island, Wisconsin and Kentucky. On October 2, 2026 Judge Martha Pacold (N.D. Ill.) gave Kalshi, Coinbase and the CFTC a partial preliminary injunction against Illinois. See [[Michael Selig]]. Selig said the CFTC "will not allow overzealous state governments to undermine the agency's longstanding authority over these markets." Illinois's governor's office answered that Washington was protecting companies engaged in insider-trading schemes. A federal regulator suing states on behalf of the companies it regulates is the clearest sign of how far the CFTC has moved under this administration. The appeals courts have split on the core question (see [[KalshiEX v. Flaherty]]), and both New Jersey and the CFTC have said the Supreme Court needs to settle it. **The sportsbooks defect.** In November 2025 [[FanDuel]] and [[DraftKings]] quit the American Gaming Association and gave up on Nevada licensing so they could sell CFTC-registered event contracts. Nevada's gaming board chairman said that wagering "occurs whether the contract is listed on an exchange regulated by the Commodity Futures Trading Commission or elsewhere." FanDuel Predicts (with [[CME Group]]) and [[Fanatics]] Markets (with [[Crypto.com]]) launched within weeks, offering sports contracts in states where their own sportsbooks are illegal. The prediction-market side lobbies through the [[Coalition for Prediction Markets]]; the casino side through the AGA, which bet365 also left in March 2026 and which now has no purely online operator as a member. ## Integrity scandals Legal betting multiplied the incentive to fix games. In the 2025–26 season: - **October 23, 2025.** The FBI arrested Miami Heat guard Terry Rozier and Portland Trail Blazers coach Chauncey Billups in two separate federal cases: Rozier in an alleged scheme to profit from inside information on player performance, Billups in an alleged Mafia-linked rigged poker operation. See [[NBA]]. - **November 9, 2025.** Prosecutors in Brooklyn unsealed charges against Cleveland Guardians pitchers Emmanuel Clase and Luis Ortiz for allegedly rigging individual pitches for bettors. Clase's alleged schemes produced more than $400,000 in winnings for bettors. - **August 2026.** Kalshi banned [[George Santos]] for life for betting against his own attendance at the State of the Union, and suspended a North Carolina House candidate for betting on her own race. Prediction markets add a new kind of risk: markets on events that one bettor controls, and markets on war, which turn classified information into a payout (see [[Iran War Market Manipulation]]). ## The political money Reuters reported in August 2026 that [[DraftKings]], [[FanDuel]], [[Fanatics]] and [[bet365]] had given **more than $72 million** in the 2026 cycle (FEC: exactly $72 million to the [[Win for America]] super PAC through June 30), the cycle's third-largest corporate bloc after crypto and AI. Most of it went through two affiliate PACs into **state** races, where gambling regulation is decided. [[Polymarket]] gave $1 million to [[Mike Johnson]]'s [[Congressional Leadership Fund]] in June 2026. The two wings are fighting each other over who regulates sports betting, and both are buying influence. ## Reform proposals - **SAFE Bet Act** (Rep. Paul Tonko and Sen. [[Richard Blumenthal]], reintroduced March 12, 2025): no sports-betting ads from 8 a.m. to 10 p.m. or during live broadcasts, no prop bets on college athletes, no in-game micro-betting, affordability checks above set wagering thresholds, no credit-card deposits, no AI-driven tracking or custom promotions, and a national self-exclusion registry. - **Prediction Markets Security and Integrity Act** (Blumenthal and Tonko, September 2026): bans markets on war, death and military action, requires age verification, and restores state authority over gambling. It came with a public campaign, "Truth and Integrity: The Movement for Gambling Reform." Both are Democratic bills, and neither has passed. ## See also - [[Problem Gambling]] · [[Prediction Markets]] · [[Prediction Markets and Gambling Sector]] - [[Kalshi]] · [[Polymarket]] · [[DraftKings]] · [[FanDuel]] · [[Fanatics]] · [[Robinhood]] · [[Crypto.com]] - [[KalshiEX v. Flaherty]] · [[Coalition for Prediction Markets]] - [[CFTC]] · [[Michael Selig]] · [[Federal Preemption]] · [[Murphy v. NCAA]]