Trump’s Crypto Bill Faces Failure: Conflict Over Prediction Markets and Tribes Escalates

The political landscape in Washington is being shaken by the issue of cryptocurrencies and prediction markets. While U.S. President Donald Trump, during a White House meeting with CFTC Chairman Michael Selig and top crypto executives, urged Congress to pass the stalled Clarity Act, massive resistance is forming elsewhere. Experts doubt the bill can overcome the required 60-vote threshold in the Senate. The situation is complex as the economic interests of the crypto industry collide directly with the sovereign rights of U.S. states and indigenous tribes, who see their revenues from traditional gambling threatened.

Amanda Fischer, formerly Chief of Staff at the SEC under the Biden administration and currently Policy Director at Better Markets, expressed skepticism regarding the bill's prospects during a webcast with the Indian Gaming Association (IGA). She views the legislative effort as a litmus test for the industry to identify allies and enemies for the upcoming elections. The Clarity Act aims to provide clarity for digital assets, but critics accuse the Trump administration of ignoring the interests of the traditional financial world and state regulatory authorities. In particular, the powers of the Commodity Futures Trading Commission (CFTC) under Michael Selig are under fire, as the agency is increasingly perceived as an arm of the crypto lobby.

Numbers and facts

A central point of contention is the classification of event contracts, such as bets on election outcomes or sporting events. In Nevada, the Nevada Gaming Control Board (NGCB) has already taken action. The court granted a 14-day temporary restraining order against the platform Kalshi, valid until April 3. This forced Kalshi to block contracts in the fields of sports, entertainment, and elections for users in Nevada. Although Kalshi argued that geofencing technology is too costly and impractical, they had to comply and now use registration data to restrict access.

"I don’t think they get to 60, because there’s so many outstanding issues that need to be resolved… And frankly, I don’t even know if they can be." - Amanda Fischer, Policy Director at Better Markets

Fischer also emphasized that the industry needs a villain to market its products, and Gary Gensler, the former head of the SEC and CFTC, fits this role perfectly. The Clarity Act would not only codify current practices but also provide amnesty for past misconduct by crypto platforms. This particularly disturbs those who demand equal treatment with the strictly regulated terrestrial gambling sector.

Background

The conflict surrounding prediction markets like Kalshi or Polymarket is not new but is gaining intensity due to technological developments. Originally, swaps emerged in the agricultural sector for risk hedging. After the 2008 financial crisis, Congress added protections. Under Gary Gensler, rules were established against contracts on war, terrorism, or gambling. However, since the election of Donald Trump, there has been an explosion of these markets, which, according to Fischer, wildly disregard existing rules. The CFTC under Selig is now trying to legally secure these markets, which critics view as a coordinated action with the affected firms.

Particularly sensitive is the role of Michael Selig himself. Fischer suspects he will soon face numerous congressional hearings, as his cooperation with the platforms raises questions about judgment and trustworthiness. With an 84 percent probability that Democrats will win control of the House after the midterms, pressure on the CFTC is likely to increase further.

Why it matters for German players

For German players, the situation in the U.S. serves as a cautionary tale about the risks of unregulated markets. While U.S. platforms like Kalshi try to bypass gambling status through crypto laws, Germany relies on the strict State Treaty on Gambling 2021 (GlüStV 2021). In this country, prediction markets that function like sports betting are illegal without a GGL license. Anyone playing in Germany should exclusively use providers listed on the official whitelist of the Joint Gambling Authority of the States (GGL). These guarantee compliance with the 1,000 Euro monthly deposit limit via the LUGAS system and the 1 Euro per spin limit for slots.

U.S. platforms without a German license offer no player protection according to German standards. If a provider like Kalshi or Polymarket were to operate in Germany, it would be a violation of the GlüStV, as they do not possess a license for sports betting or virtual slot games. German customers using such gray market platforms risk losing their funds without legal recourse domestically. The GGL actively takes action against illegal providers to maintain market integrity.

What it means for GGL-licensed casinos

For operators with a GGL license, the development in the U.S. signifies a confirmation of their course. The strict rules in Germany prevent exactly the wild west conditions that are currently causing political paralysis in Washington. Licensed casinos in Germany do not have to fear that technological "innovations" like blockchain-based prediction markets will suddenly enter their core market without oversight. The GGL ensures fair competitive conditions by blocking illegal competition from abroad. The example of Nevada shows that even established gambling hubs must take tough action against unlicensed platforms to protect their own taxpayers and licensed businesses.