The gambling industry's biggest divorce is now official. DraftKings and FanDuel have both resigned from the American Gaming Association, the industry's main lobbying group, as the battle over prediction markets creates a genuine rift in the gambling world. Welcome to 2026, where the sportsbooks and casinos can't even agree on what counts as gambling.

The Quick Hit

• What happened: DraftKings and FanDuel officially left the American Gaming Association
• The reason: Disagreements over prediction markets legitimacy and the AGA's stance against them
• Why you should care: This signals a major philosophical split in the gambling industry
• The fallout: The AGA loses two of its most prominent members as prediction markets explode

Why They Left

FanDuel put it plainly: "As we expand into prediction markets, we recognize this direction is not aligned with the American Gaming Association's current priorities for its member operators."

Translation: The AGA has been fighting against prediction markets, calling them unregulated gambling. DraftKings and FanDuel are betting big on prediction markets as the next frontier, and they're not going to sit in a trade group that actively opposes their growth strategy.

Both companies launched prediction market platforms in December, with DraftKings rolling out in 38 states at launch and FanDuel taking a more measured approach through a partnership with CME Group in five states without legal sports betting.

The Prediction Markets War

Here's the background: Prediction markets let you bet on outcomes of real-world events—elections, sports, economic indicators, whatever. Traditional sportsbooks see them as a threat because they operate under different regulatory frameworks and often face less oversight.

The AGA has sided with traditional casinos and state regulators who want prediction markets treated like gambling. States like Nevada, New Jersey, and Maryland have moved to block platforms like Kalshi from offering sports-related contracts.

DraftKings and FanDuel see a $5 billion opportunity and don't want to be constrained by an industry group fighting that future. So they walked.

What This Means for Bettors

In the short term? Nothing changes for you. DraftKings and FanDuel will keep operating their sportsbooks exactly as before. Their prediction market products will continue launching in whatever states allow them.

Long term, this split could shape how gambling regulation evolves. The AGA now represents traditional casinos more than it represents the sports betting industry. That might matter when Congress or state legislatures consider new gambling laws.

The prediction markets showdown is likely headed to the Supreme Court at some point, and the industry positions are now clearly drawn.

The Bigger Picture

2025 was the year prediction markets exploded. Billions of dollars poured into platforms like Kalshi and Polymarket (which is still fumbling its U.S. launch). DraftKings, FanDuel, Robinhood, PrizePicks, Underdog, and Fanatics all launched prediction products.

The AGA represents the old guard—the casino operators who've been in business for decades. DraftKings and FanDuel represent the new school—tech companies that happened to get into gambling. Those worlds were always going to collide eventually.

The Bottom Line

The gambling industry is splitting into factions, and the prediction markets debate is the wedge issue. DraftKings and FanDuel are betting their futures on this new product category, and they're not going to let an industry trade group slow them down. Whether that's visionary or reckless depends on how the regulatory battles shake out. Either way, 2026 is going to be interesting for anyone who follows this space. The new gambling tax rules taking effect today are just the start of what promises to be a transformative year.