Victor Rocha and Jason Giles from the Indian Gaming Association (IGA) hosted a discussion on Wednesday featuring three prominent tribal gaming attorneys during the IGA's New Normal webinar series. The webinar highlighted the implications of prediction markets on tribal sovereignty and gaming rights, a topic that has garnered increasing attention in light of recent challenges from sweepstakes sites. As prediction markets expand, the three guest experts – Joseph Webster, Bryan Newland, and Scott Crowell – described them, particularly in relation to sports contracts, as an 'existential threat' to Indian gaming. They emphasized the need for determining the most effective legal strategies to address this challenge.
Giles, who serves as the IGA's executive director based in Washington, shared insights from his recent conversations with policymakers, noting a general lack of awareness surrounding the issue. He mentioned discussions with officials in Nevada, who indicated they had not been approached by the state's commercial operators regarding prediction markets.
Tribes have largely opposed prediction markets, which are legally permitted in all 50 states, including those that have agreements with tribes for exclusive gaming rights. Following the Commodity Futures Trading Commission's (CFTC) opening of a public comment portal on prediction markets earlier this year, tribal interests have been the predominant voices contributing feedback.
To date, Indian Country has not engaged in legal action against prediction markets, with state regulators currently handling the situation. Three states are involved in ongoing litigation against Kalshi, a prediction market platform, but panelists noted that tribes still possess avenues to influence the unfolding dispute.
Jurisdiction is central to this discussion. Prediction markets, such as Kalshi, have argued their federal legality under the CFTC, which consequently preempts state gaming regulations. This argument has proven effective; Kalshi has secured preliminary injunctions allowing it to operate in Nevada and New Jersey after countersuing those states. "If you’re keeping score from a litigator point of view, they’re on a roll," Crowell remarked.
States now find themselves seemingly pitted against the federal government. Previous administrations had fierce debates surrounding election betting and prediction markets, but early actions in President Donald Trump’s new term have shifted the dynamics. Donald Trump Jr. serves as an advisor to Kalshi, while President Trump nominated Brian Quintenz, a Kalshi board member and supporter of prediction markets, to chair the CFTC. Last month, the CFTC's appeal regarding election betting, initiated under the Biden administration, was formally withdrawn.
During a pivotal moment on Election night at Mar-a-Lago, Donald Trump Jr. tweeted about using Kalshi to gauge positive outcomes ahead of the media reports. "Today, I am proud to contribute to their mission," he wrote, emphasizing the importance of prediction markets for his family. Crowell noted this situation has created a convergence of interests between states and tribes as they confront the expansion of unwanted gaming, although tribes might benefit from the Indian Gaming Regulatory Act (IGRA), which governs tribal gaming.
Newland expressed that if the Commodities Exchange Act (CEA) overrides state gaming laws, the same might apply to IGRA. The outcome of a direct CEA-IGRA clash remains uncertain, but past arguments against prediction markets have often faltered. Webster noted that IGRA was referenced in Kalshi's legal brief against Nevada, where Kalshi claimed sports event contracts do not fall under IGRA's jurisdiction, adding, "In essence, they’re suggesting that Congress, in passing the CEA, has eliminated any role for tribes in what is clearly gaming activity."
Introducing IGRA into the dispute could, under certain conditions, provide clarity for tribes, Newland argued. As he stated, "If it’s gaming, they’re violating tribal laws; if it’s not gaming, then why are we following IGRA at all?" This tension underlines the heart of the matter.
Existing CFTC regulations already forbid contracts involving gaming; however, Kalshi has successfully contended that prediction markets do not constitute gaming. The panelists warned that the legal landscape remains fluid, and recent decisions could be overturned. They recognized that the expansion into sports betting extends far beyond the original intentions for the markets, which were designed primarily for economic hedging. Crowell suggested that litigators could use Kalshi's own marketing language against them as they argue their case.
"You must admire their chutzpah," Rocha remarked, drawing parallels between Kalshi's tactics and tribal determination. The National Indian Gaming Commission (NIGC) was also cited for its role as a federal agency involved in Indian gaming. Newland recalled that the NIGC had ruled years ago that sports betting is classified as Class III gaming, conflicting with Kalshi's position in Nevada.
However, the NIGC has faced challenges in recent months due to a lack of a confirmed chair and awaits a new nomination from the Trump administration, leaving future impacts uncertain. As developments unfold, various stakeholders must brace for all possible outcomes. While gaming serves as a crucial economic engine for many tribes, commercial operators face less immediate pressure. They have the luxury of allowing states to fight their battles; should prediction markets gain legal support, they could pivot to that sector, potentially resulting in reduced tax obligations.
Earlier this year, DraftKings sought to register 'DraftKings Predict' with the National Futures Association, a move that was later retracted. Meanwhile, Flutter Entertainment, owner of FanDuel, revealed on its first-quarter earnings call that it transferred some staff from Betfair to FanDuel in order to analyze opportunities in prediction markets.
For tribes, the need to defend their interests remains urgent, though the rapid pace of these events presents new challenges. As Crowell observed, he has "never seen such an existential threat progress so quickly," while Webster asserted, "It’s not something that’s coming. It’s here."
