The U.S. Senate rejected a procedural motion needed to advance the CLARITY Act on Tuesday, blocking legislation that tribal-gaming operators and lawmakers said was a crucial step toward stopping prediction-market companies from offering sports-event contracts outside state and tribal gaming systems. Senators voted 49-50 against cloture, falling well short of the 60 votes required.
The failed vote rejected a procedural step that limits debate on whether to take up the legislation at all. The CLARITY Act would establish rules for crypto markets and clarify the respective responsibilities of the Securities and Exchange Commission and the Commodity Futures Trading Commission. Even if cloture had passed, the bill would still have needed to return to the House for consideration, and it is now likely dead for 2026, with no realistic path to reconciliation until after the November midterm elections.
Cortez Masto Cites Illegal Gambling Concerns
Senator Catherine Cortez Masto, D-Nevada, said the bill would allow prediction markets to continue operations she characterized as illegal gaming that ignores state and tribal law. She said the version under consideration marked a step backward from language passed out of the Senate Banking, Housing and Urban Affairs Committee and argued it undermined law enforcement’s ability to investigate crypto crimes, according to a statement following the vote. Senator Jacky Rosen, D-Nevada, joined Cortez Masto in voting no.
Supreme Court Petitions Loom Over the Fight
Cortez Masto’s objections come as Crypto.com and Robinhood have petitioned the U.S. Supreme Court to consider whether the Commodity Exchange Act preempts states from regulating sports-event contracts through their own gaming laws. That filing follows a Ninth Circuit ruling affirming a Nevada judge’s decision to dissolve an approved Kalshi injunction, allowing state gaming regulators to enforce state gambling laws against sports-event contracts. Whether the Supreme Court takes up either writ of certiorari remains unknown.
The Indian Gaming Association, tribal nations and partner organizations had lobbied Congress for months to reject any CLARITY Act version that failed to explicitly protect tribal sovereignty, the Indian Gaming Regulatory Act, tribal-state compacts, and the authority of tribal and state governments to regulate gaming within their jurisdictions – concerns detailed in tribal leaders’ warnings to Congress over prediction-market expansion.
DeFi Language Divided Operators
The revision at issue specified that the bill’s DeFi provisions apply only to spot and cash digital-commodity transactions, a distinction reportedly meant to reduce the risk that broad DeFi language would inadvertently rewrite regulations governing event contracts. Tribal and commercial operators and state gaming regulators opposed the revision regardless, arguing it left the door open for federally regulated platforms to sidestep existing oversight – a tension that has also shaped CFTC rulemaking fights over prediction markets.
David Bean, chairman of the Indian Gaming Association, called the Senate’s failure to advance H.R. 3633 a victory for tribal sovereignty but warned the fight against illegal prediction markets offering sports-event contracts continues. He said the association would keep pushing for federal legislation and regulatory action protecting IGRA and tribal-state compacts from preemption, preserving tribal authority to regulate gaming, and prohibiting federally regulated prediction markets from offering sports betting and casino-style gambling through event contracts or decentralized finance platforms.
What Comes Next
With reconciliation unlikely before the midterms, attention shifts to the Supreme Court’s undecided call on the Robinhood and Crypto.com petitions and to ongoing regulatory discussions, including recent industry conversations reflected in CFTC summit talks on prediction-market rules. Bean said any future legislation on digital assets or prediction markets must begin from a clear principle that tribal sovereignty is not negotiable.
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