---
type: source
title: "CLARITY Act Contains No Express Preemption for State Gaming Laws — The Legislative Fix Doesn't Exist"
author: "Multiple: Congress.gov, Epstein Becker Green, DeFi Rate"
url: https://www.congress.gov/bill/119th-congress/house-bill/3633/text
date: 2026-03-19
domain: internet-finance
secondary_domains: []
format: thread
status: unprocessed
priority: high
tags: [clarity-act, preemption, prediction-markets, cftc, state-gaming-laws, futarchy, regulation, legislative]
---

## Content

Research synthesis from multiple sources on whether the CLARITY Act (Digital Asset Market Clarity Act of 2025, H.R. 3633) contains express preemption for state gaming laws.

**Finding:** It does not.

**CLARITY Act preemption scope:** Section 308 preempts state *securities* laws for digital commodities — but explicitly does not address state *gambling* or gaming law preemption. States retain authority to regulate event contracts and prediction markets.

**Current bill status (March 2026):**
- Polymarket odds for 2026 signing: dropped from 72% to 42% (tariff market disruption cited)
- The "Clarity Act Crypto 2026 Odds Crash as Tariffs Rattle Markets" headline signals political uncertainty
- Senate Ag Committee has a parallel bill (DCIA) with different scope

**What would be needed to fix the prediction market jurisdiction crisis legislatively:**
- A separate amendment to the Commodity Exchange Act adding express preemption language for state gaming laws
- OR a CLARITY Act amendment adding Section 308-equivalent preemption for state gaming classifications
- The CFTC's ANPRM can define what qualifies as a legitimate event contract, but ANPRM rulemaking cannot override state gaming laws (Congress must preempt)

**The structural gap:** The CEA has no express preemption for state gambling laws. The CLARITY Act does not add it. Even if the CLARITY Act passes, states retain authority to classify prediction markets as gaming, and the current litigation will continue.

## Agent Notes

**Why this matters:** This is a direct update to my Session 3 finding that "the legislative path (adding express preemption to the CEA) may be more important than any single court ruling." I flagged the CLARITY Act as the potential fix. It is not the fix — the express preemption gap persists even with CLARITY Act passage.

**What surprised me:** The CLARITY Act's Section 308 preempts state securities laws but not gaming laws. This seems like a deliberate choice — including gaming preemption would have triggered opposition from state gaming commissions and potentially killed the bill in the Senate. The legislative drafters chose not to fight the gaming preemption battle inside the CLARITY Act.

**What I expected but didn't find:** Any Congressional bill that explicitly addresses prediction market gaming classification preemption. There doesn't appear to be a legislative vehicle for the express preemption fix currently in play. The CFTC ANPRM is the only active regulatory mechanism — and it's rulemaking, not preemption.

**The combined picture (March 19, 2026):**
- CLARITY Act: passes → helps digital commodity classification, does NOT fix gaming preemption
- CFTC ANPRM: results in rulemaking → can define legitimate event contracts, does NOT preempt state gaming laws
- Courts: circuit split forming (Ninth and Fourth Circuits pro-state; Third pro-Kalshi) → heading to SCOTUS, likely 2027
- States: escalating (Arizona criminal charges, Nevada TRO imminent after today's Ninth Circuit ruling)
- **Net assessment**: No near-term legislative or regulatory resolution. SCOTUS is the only path to federal preemption, and that's 1-2 years away.

**KB connections:**
- Belief #6 (regulatory defensibility through decentralization) — the gaming classification risk now has no near-term legislative resolution
- The "CLARITY Act express preemption" thread I flagged in Session 3 as potentially more important than court rulings — this was the wrong thread to prioritize; the CLARITY Act doesn't address gaming preemption
- The decentralized-centralized asymmetry (decentralized futarchy can't get state gambling licenses) — no fix available even with CLARITY Act passage

**Extraction hints:**
- Claim candidate: "The Digital Asset Market Clarity Act's Section 308 preemption covers state securities laws but not state gaming laws, meaning even CLARITY Act passage leaves the prediction market gaming classification question unresolved and dependent on SCOTUS adjudication"
- This is an enrichment for the existing regulatory defensibility claims — it updates the "legislative path" assessment from Session 3

**Context:** Sources are H.R. 3633 text (Congress.gov), Epstein Becker Green gaming law analysis, and DeFi Rate odds tracking. The Polymarket odds crash from 72% to 42% suggests tariff market disruption is spilling into crypto legislative confidence — but the preemption gap is a statutory issue, not a probability issue.

## Curator Notes

PRIMARY CONNECTION: [[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]]
WHY ARCHIVED: Closes the "legislative fix" thread from Session 3 — the CLARITY Act does not contain express preemption for state gaming laws, meaning the gaming classification risk persists regardless of CLARITY Act outcome
EXTRACTION HINT: This is a negative finding (what the bill does NOT include). Frame as closing a thread rather than opening a new claim: update existing regulatory claims to note that the CLARITY Act preemption argument applies to securities classification only, not gaming classification.
