As the prediction market rapidly expands in the United States, more and more tribal law experts are issuing warnings, stating that this trend poses an unprecedented "existential threat" to the Native American gaming system.
At the "New Normal" series of webinars hosted by the Indian Gaming Association (IGA), three prominent tribal gaming lawyers—Joseph Webster, Brian Newland, and Scott Crowell—stated that the prediction markets, especially those centered around sports contracts, are shaking the tribal sovereignty and legal protections over gaming activities.
Currently, the U.S. Commodity Futures Trading Commission (CFTC) acts as the main regulator of the prediction markets, while platforms like Kalshi are attempting to circumvent state gaming laws through this. Despite objections from states like Nevada and New Jersey, Kalshi has still won a preliminary injunction, allowing it to operate in these states.
However, experts point out that the Indian Gaming Regulatory Act (IGRA) was supposed to provide tribal protection in such federal regulatory disputes, but has so far not played a significant role in key lawsuits. Webster warns that Kalshi is attempting to strip gaming from the provisions of IGRA, weakening the tribal position in gaming regulation.
Unlike state governments, tribes lack direct litigation experience on the legality of prediction markets, but legal experts believe that once the current state lawsuits conclude, tribes may have to proactively engage in legal battles to protect their interests.
Meanwhile, prediction market platforms are trying to package sports predictions as "non-gambling" activities to evade CFTC regulations prohibiting gambling contracts. Experts view this argument as a manipulation of legal language, also revealing their expansion intentions.
While commercial giants like DraftKings and FanDuel have not yet made significant moves into the prediction market, they are already assessing opportunities in this area. For tribes heavily reliant on gaming revenue, losing control could mean a severance of their economic lifeline.
"This is not a distant threat, but a reality that is happening," Webster sternly warned.
