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America’s gambling sector, including tribal casino operators, wants Congress to amend its crypto market structure bill to ban prediction markets from offering sports bets.
- CLARITY faces new opposition from gaming sector, tribes
- Congressional calendar lacks CLARITY
- Anti-CBDC efforts just won’t die
- Strategic Bitcoin Reserve is totally happening and not at all a mirage
- Illinois gov okays crypto tax, crypto sector loses it
The crypto industry’s already faint-hope desire for Congress to pass its digital asset market structure legislation (CLARITY Act) before legislators leave town in August just keeps getting more complicated.
On June 17, Semafor reported that the U.S. gaming industry has teamed up with tribal gaming operators and casino labor unions to urge Congress to revise CLARITY to prohibit crypto-friendly prediction markets from offering sports wagering without securing state-issued gaming licenses.
Platforms like Kalshi and Polymarket make the bulk of their revenue via ‘sports event contracts,’ but the Commodity Futures Trading Commission (CFTC) has been suing any state that dares challenge these platforms in court. The CFTC’s new chairman, Michael Selig, has been extremely vocal in his view that prediction markets are “federally regulated derivatives exchanges subject to the CFTC’s exclusive jurisdiction.”
The gaming sector letter is signed by the American Gaming Association, the Indian Gaming Association, the AFL-CIO’s Hotel and Gaming Trades Council, the hospitality industry labor union UNITE HERE, and dozens of other state, national, and tribal organizations.
The groups have their differences with each other but claim to be “united in our concern that prediction markets have fueled the largest expansion of gambling in U.S. history over the past 18 months—without voter approval or legislative authorization.”
The groups believe “Congress should not wait while this nationwide expansion of gambling continues. It should use crypto legislation to reaffirm a simple principle: sports betting falls outside the CFTC’s remit and cannot be offered through prediction market platforms.”
The groups note that “litigation may eventually clarify the law, but this is ultimately a question of congressional intent.” There have been several court victories by both sides of this divide, including a ruling in a Michigan federal court on Wednesday that denied Polymarket’s bid for a temporary restraining order against state Attorney General Dana Nessel.
Judge Paul Maloney of the U.S. District Court for the Western District of Michigan said Polymarket failed to prove that its sports bets were actually ‘swaps’ as defined by Congress when it authorized the CFTC to oversee such activity.
Maloney rejected Polymarket’s legal arguments, saying their “vision of the scope of derivatives is so vast that it would encompass vast swaths of activity never understood to be associated with the financial industry and instead traditionally associated with core state, as opposed to federal, responsibilities.”
Wednesday also saw Kentucky Attorney General Russell Coleman file lawsuits against both Kalshi and Polymarket (and an online casino) for “operating unlicensed and illegal sports betting and gambling platforms in Kentucky.” The AG says the platforms offer the same money lines, spreads, point totals, parlays and prop bets as traditional sportsbooks, and “calling them ‘sports event contracts’ doesn’t make them legal.”
Interestingly, Coleman is also targeting the Coinbase (NASDAQ: COIN) exchange, the Robinhood (NASDAQ: HOOD) trading platform, and financial services firm WeBull (NASDAQ: BULL), all of which are Kalshi’s ‘affiliates’ that “split the fee whenever a bet is made” via these platforms’ Kalshi-powered prediction markets.
Selig has yet to respond, but will almost certainly sue Kentucky before the week is through, as Kentucky has a Democratic governor (Andy Beshear) and all the CFTC suits to date have exclusively targeted Democratic-led states. It’s widely expected that this legal tit-for-tat will continue until the U.S. Supreme Court issues its own verdict, but that could take some time.
For the moment, the gaming industry’s last-minute intervention into the already complex CLARITY process could pour even more sand into these already slow-moving legislative gears.
Tick, tick, tick… no boom?
On Tuesday, Rep. Dusty Johnson (R-SD), chair of the House of Representatives Agriculture Committee’s Digital Assets Subcommittee, gave an interview with the Crypto in America podcast in which he laid out the challenges facing CLARITY on its way to Trump’s desk for signing into law.
Johnson promised that the House would move swiftly to approve CLARITY if/when at least 60 senators vote ‘aye.’ But Johnson cautioned that the House will need to be cool with whatever emerges from the Senate. If not, it will get revised there and then have to return to the Senate for their approval, and the show starts all over again with an even smaller window of time.
Johnson said the Senate needed to secure that ‘aye’ vote before August, when Congress takes its traditional summer break. “The remainder of the year is just really difficult for us to get a lot done.” With the fate of Trump’s Iranian ‘excursion’ still unclear, the economy in a shambles, and many other far more pressing matters than crypto, Congress will have its hands full when it returns in September. And “members in swing seats will want to be home in October” to campaign for re-election, so that month’s a write-off.
As for hopes that CLARITY could pass during a post-midterm ‘lame duck’ session, Johnson emphasized that “we cannot count on the lame duck” for approval. “There are too many things that everyone is counting on to get done in the lame duck … maybe zero will get done.” Johnson said CLARITY was “too important for us to leave to that pile-up at the end of the year.”
Punchbowl News’ Brendan Pedersen recently reminded us that the stablecoin-focused GENIUS Act that Congress approved last summer “burned weeks of floor time,” and CLARITY “is a far more complicated bill.”
CBDC what they did there?
Congress isn’t completely sitting on its hands on the crypto front, as the House just convinced the Senate to tweak its Housing Act to prohibit the Federal Reserve from issuing a central bank digital currency (CBDC). The updated text of the Senate’s version of the Housing bill was released this week, with voting to commence posthaste, after which the bill will return to the House for final approval and then to Trump’s desk for signing into law.
The CBDC ban isn’t permanent, as many members of the GOP’s Freedom Caucus would have preferred, but it will eliminate the threat of the godless commies at the Fed from issuing a CBDC before New Year’s Day 2031. That said, expect House anti-CBDC types to continue pressing the Senate to amend this language before the vote to reflect their original desire to permanently tie the Fed’s hands on this score.
The updated text does include an exception that would permit the Fed to issue a dollar-backed stablecoin, provided that it’s “open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical currency.”
Late last month, Treasury Secretary Scott Bessent declared that “this administration has been very clear: there will be no [CBDC], which I think would be the first step toward tracking, so we have taken that off the table.”
Strategic reservations
Earlier this month, Bessent appeared before the Senate Finance Committee, where Sen. Tim Scott (R-SC) inquired about Treasury’s progress in fulfilling the executive order Trump issued in March 2025 regarding the establishment of a Strategic Bitcoin Reserve.
The Reserve is to be established with all the BTC that federal authorities have seized over the years via civil or criminal forfeitures. Scott also asked Bessent about the Digital Asset Stockpile, the collection of non-BTC tokens currently in the government’s possession, that was part of the same executive order.
Bessent said both the Reserve and Stockpile represent “new technology” and “new ground,” and so the government is “proceeding with all deliberate speed and we are making sure that as we are doing this, in this complicated process, that we use best practices and things will be durable for the future. But if Scott was looking for verifiable evidence of tangible progress, Bessent left him hanging.
On May 21, the bipartisan House pair of Nick Begich (R-AK) and Jared Golden (D-ME) introduced HR 8957, aka the American Reserve Modernization Act of 2026. The Act seeks to ensure that tokens under government control are securely stored, so there’s no repeat of the $46 million theft by the son of a contractor who’d been hired to ensure the tokens’ safety. (Isn’t it ironic?)
But while the Stockpile’s tokens may be sold off as the government sees fit, any sale of BTC would first need to clear several procedural hurdles, including publicly declaring its plans in advance. And there would be a 20-year lockup starting from the date the BTC is deposited into the Reserve.
This week, Begich told the Bitcoin Policy Institute that his push for a BTC reserve was based on his belief that “the consensus store of value across economies could shift.” As such, America should “complement and diversify our existing reserve asset portfolio” and not “start disposing an asset that could be of strong strategic value over the long haul.”
Begich’s faith in BTC’s value-retaining properties appears unshaken by the 50% price decline the token has suffered over the past six months. Regardless, as far as America goes, Begich insists it’s time to “update our insurance policy with Bitcoin.”
Sen. Cynthia Lummis (R-WY) has long pushed her own Reserve-type bills without success, and despite not seeking re-election this November, she’s still pushing the federal government to use all the tools at its disposal to stop relying on forfeitures and just buy a million BTC on the open market, already.
On June 10, Lummis tweeted that other countries “are accumulating Bitcoin quietly. We should be doing it loudly, on the record, by law.” The next day, she tweeted: “A Strategic Bitcoin Reserve is the most asymmetric bet the U.S. Treasury could make. The downside is manageable. The upside is generational.” Possibly, but the progress is glacial.
Taxing times
Congress has also attempted to address unresolved issues surrounding the taxation of digital assets. Last week, the House Ways & Means Committee held a hearing to consider no less than six new GOP-authored crypto tax bills (and one ‘discussion draft’) addressing everything from mining and staking to transaction ‘gas’ fees to amnesty for those who’d failed to pay taxes on previous token sales but are now willing to do so to avoid fines/prison.
But the hearing was largely a bust, as the Committee’s Democrat members expressed concerns that the flurry of bills was a case of too much, too fast to allow proper discussion of such an important topic. Even before the hearing began, ranking member Richard Neal (D-MA) suggested that achieving bipartisan consensus on a sweeping crypto tax framework before November’s midterms was unlikely.
Rep. John Larson (D-CT) acknowledged “a sense of urgency” regarding crypto taxation but wondered if the Committee was “acting too quickly without knowing what we’re doing.” Larson said the crypto sector shows promise, but he felt there are “far more questions than there seem to be answers to give you the confidence that we’ve got it right just yet.”
The urgency felt by crypto operators increased in intensity on Tuesday as Illinois Gov. J.B. Pritzker signed new budget legislation that contains controversial tax provisions for crypto transactions. The Digital Asset Privilege Tax Act (DATA) section of the bill will impose a 0.2% tax on crypto transactions starting January 1, 2027.
The tax will be paid by exchanges, custodians, and other platforms (‘digital asset brokers’) that facilitate the exchange, transfer, or storage of tokens in connection with a business transaction involving an Illinois-based customer. Brokers, even those based out of state but which do over $100,000 worth of business with Illinois-based customers, will need to register with the state’s Department of Revenue by year’s end and submit tax reports on a monthly basis.
The 0.2% will be applied to the value of transactions by customers of these intermediaries, who will almost certainly pass on these costs to their customers. The state expects this tax to generate up to $60 million annually.
Not surprisingly, crypto operators are apoplectic. The Crypto Council for Innovation (CCI) called it “the most punitive digital asset tax in the country” that “disproportionately burdens Illinois residents for simply using digital assets and will drive innovation and builders out of the state.”
Miles Jennings, head of policy at the crypto-friendly Andreessen Horowitz (a16z) (NASDAQ: ZADIHX) venture capital group, called the new tax “one of the most anti-crypto laws in the U.S.” Noting the lack of a similar tax on “stocks, bonds, or derivatives,” Jennings claimed, “crypto is being singled out in violation of several federal laws.”
The Digital Chamber claimed Illinois acted “without stakeholder input” and issued similar warnings about “driving innovation, investment, and jobs away from Illinois.” Digital Chamber CEO Cody Carbone called the state’s decision “asinine” and said Illinois was “ensuring they’re left behind as innovation leaves the state.”
In a letter issued shortly after the state legislature approved the budget bill on June 1, the Digital Chamber and the Illinois Blockchain Association jointly expressed their opposition and questioned what they claim is “unclear” language regarding what constitutes a “digital asset business activity” subject to the new tax.
The letter wonders if “a digital asset business or their customer, who merely transfers assets between wallets, converts one digital asset to another, or places assets in custodial storage, could be taxed at 0.2% of full asset value regardless of whether any economic gain has been realized, and even in instances where economic loss occurs.”
Since Pritzker is one of Trump’s least favorite antagonists—Trump called Pritzker ‘SCUM’ in a recent Truth Social post over the latter’s opposition to the Trump-friendly prediction markets operating without state betting licenses—it’s reasonable to assume that Trump won’t stay silent for long on Pritzker’s latest thumb-in-your-eye.
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