CLARITY Act Vote Leaves US Prediction Market Rules Unchanged as Senate Bill Stalls

The US Senate failed to advance the Digital Asset Market Clarity Act on 15 September 2026, leaving provisions affecting prediction markets unresolved as the legislation did not obtain the votes required to proceed. The cloture motion on the motion to proceed to H.R. 3633 failed by a vote of 49-50, with 60 votes required. Senator Thom Tillis subsequently entered a motion to reconsider the vote.

The CLARITY Act was designed to establish a federal regulatory framework for digital commodities and define responsibilities for the Securities and Exchange Commission and Commodity Futures Trading Commission. The legislation also contained provisions relevant to prediction markets, an area where event contracts relating to sports and other events have expanded in the United States.

Prediction markets allow users to trade contracts whose value depends on the occurrence or outcome of specified events. Sports-related contracts have become a significant area of activity, while cryptocurrency-related contracts also represent a substantial category of prediction-market trading. The CFTC has separately issued guidance and proposed regulatory changes concerning event contracts, including contracts linked to sporting events.

The version of the CLARITY Act released before the Senate vote contained amendments addressing concerns surrounding decentralised finance and prediction markets. Updated provisions specified that certain DeFi provisions would apply only to spot and cash digital-commodity transactions. The changes were intended to address concerns about the potential impact of the legislation on prediction markets.

The treatment of sports and casino-related event contracts had been a significant issue during consideration of the legislation. Gaming organisations, state associations and labour groups had urged senators to include provisions excluding sports and casino-related contracts from the framework applicable to digital commodities. The groups argued that sports-event contracts offered through prediction-market platforms should not be treated as commodities contracts within the CFTC's jurisdiction.

The issue is particularly relevant to the US gaming industry because prediction-market operators have increasingly offered contracts connected with sporting events. Traditional gaming companies and industry organisations have challenged the expansion of these products, while prediction-market operators have maintained that their contracts fall within the federal commodities framework. The competing positions have also resulted in litigation and regulatory proceedings concerning the authority of the CFTC and the applicability of federal commodities law to event contracts.

The CFTC has been addressing prediction markets independently of the CLARITY Act. In March 2026, the agency's Division of Market Oversight issued an advisory concerning the listing of event contracts by designated contract markets. The advisory addressed regulatory obligations under the Commodity Exchange Act and CFTC regulations and specifically discussed issues applicable to sports-related event contracts.

In June 2026, the CFTC also published a proposed rulemaking concerning event contracts involving activities enumerated under the Commodity Exchange Act. The proposal covers contracts involving activities such as gaming and other activities identified in the statute and establishes a proposed framework for determining whether particular contracts fall within those categories and whether they are contrary to the public interest.

The CFTC proposal followed an earlier advance notice of proposed rulemaking on prediction markets. Under the proposed framework, the Commission would assess certain event contracts individually, applying specified factors and a proposed 90-day review process. The proposal also addresses the meaning of statutory terms including "involve" and "gaming."

The failure of the CLARITY Act vote therefore did not itself eliminate the existing federal regulatory processes governing prediction markets. The CFTC's separate advisory and rulemaking activities remain part of the regulatory framework applicable to event contracts offered through CFTC-regulated markets.

The Senate vote also leaves the broader federal legislative framework for digital assets unresolved. H.R. 3633 did not receive the 60 votes required to invoke cloture, although the subsequent motion to reconsider means the measure was not procedurally foreclosed from being reconsidered. The Senate's official record identifies the legislation as a bill concerning regulation of the offer and sale of digital commodities by the SEC and CFTC, among other provisions.

For prediction markets, the immediate consequence is that no new statutory framework contained in the CLARITY Act has taken effect. Questions concerning the classification and regulation of sports-related event contracts therefore continue to be addressed through existing federal law, CFTC regulatory proceedings and ongoing disputes involving prediction-market operators and gaming interests.

The Senate vote occurred shortly before the November 2026 midterm elections and after months of negotiations over the legislation. The updated bill released before the vote incorporated more than 100 changes, including provisions concerning DeFi, banking activities and prediction-market-related concerns. The legislation nevertheless failed to secure the votes needed to move forward.

The CLARITY Act remains subject to the possibility of further congressional consideration following the motion to reconsider, but the 15 September vote did not advance the bill toward passage. Until further legislative action occurs, the regulatory status of prediction-market contracts continues to depend on existing federal law, CFTC rules and proceedings, and applicable state-level measures.

By fLEXI tEAM