Senators Call for Prediction Market Regulation to Protect Tribal Sovereignty

^{According to New Mexico Senator Martin Heinrich, 16 tribes and pueblos in his state have signed on to a letter aimed at slowing down prediction markets. (Photo: Ron Sachs / CNP / MediaPunch / Alamy)}

A dozen U.S. senators have signed on to a letter asking for stronger regulation of prediction markets, saying that a pair of proposals could exasperate issues that are threatening tribal sovereignty.

The senators, all Democrats, sent the letter to Sen. Tom Scott (R-S.C.) and Sen. John Boozman (R-Ark.), respectively the chairs of the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry.

DCIA, CLARITY Act Under Fire from Lawmakers

The letter addresses two pieces of draft legislation: the Digital Asset Maret Clarity Act (CLARITY Act), and the Digital Commodity Intermediaries Act (DCIA). The senators claim that those bills would “[remove] regulatory accountability for decentralized finance (DeFi) betting protocols that deploy unvetted prediction and wagering markets, directly infringing on instances of tribal gaming exclusivity and state police powers.”

“We submit that failing to address these concerns through forthcoming legislation would constitute a direct conflict with the basic tenets of tribal sovereignty, dereliction of U.S. trust and treaty obligations to tribes across the country, and a violation of states’ police powers,” the letter reads.

The letter addresses existing concerns over how prediction markets are potentially removing revenue from Native American tribes, as well as the ongoing legal battle over whether states can regulate the platforms, which claim they are exclusively overseen by the Commodity Futures Trading Commission (CFTC). It also references the Indiana Gaming Regulatory Act (IGRA), which provides “the legal and jurisdictional framework governing all gambling operations, including sports wagers, on tribal lands.”

According to the senators, the bills in question would only make these issues worse.

“Currently, prediction markets are misusing federal commodity and derivatives rules to offer nationwide sports and event wagering, completely ignoring state and tribal gaming licenses and regulations,” the letter reads. “As currently drafted, the DCIA contains explicit exemptions from CFTC regulatory jurisdiction, and the CLARITY Act contains parallel exemptions from federal securities oversight for platform developers and non-custodial DeFi infrastructure providers.”

Tribes Back Efforts to Slow Prediction Markets

The letter has received significant support from tribal gaming groups. The Indian Gaming Association and National Congress of American Indians have both signed on to the message. Individual legislators have pointed out tribes in their own states that support the letter, such as Sen. Martin Heinrich (D-N.M.), who said that 16 tribes and pueblos in New Mexico had signed on.

The statement comes as Congress continues to scrutinize the growth of prediction markets like Kalshi and Polymarket in the United States.

On Tuesday, July 21, the House Subcommittee on Commodity Markets, Digital Assets, and Rural Development is set to hold a hearing titled “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets.” That hearing follows a report that a teleprompter operator for President Trump was under investigation for making around $100,000 by trading contracts related to what the president would say in speeches.