Tribes Warn Prediction Markets May Undermine State Compacts

^{The Commodity Futures Trading Commission will weigh what prediction markets should and should not be able to do. (Photo: Ascannio / Alamy)}

Tribal officials are warning that allowing prediction markets to offer contracts based on sporting events could upend existing compacts with states across the country and cost tribal nations significant revenue important to their communities.

The comments were made ahead of a Thursday hearing of the House Agriculture Committee, in which representatives grilled Commodity Futures Trading Commission (CFTC) Chairman Michael Selig about exactly what prediction markets should and shouldn’t be allowed to do.

Tribes See Threat of ‘Erasure’ from Prediction Markets

Tribes have been among the loudest critics of prediction markets since sites like Kalshi and Polymarket began offering sports-based contracts in early 2025. The federal government – and prediction market operators – maintain that these offerings are financial swaps under the exclusive jurisdiction of the CFTC, and as such aren’t subject to state or tribal gaming regulations.

But tribal officials argue that this is a distinction without a difference. Furthermore, they say that such a rule would undermine the sovereignty of tribal nations and their exclusive right to offer certain types of gaming in many states.

“If the federal government decides these are commodities instead of bets, it wipes out the foundation of tribal exclusivity,” Indian Gaming Association Chairman David Bean told reporters on a call last week. “That’s not modernization – that’s erasure.”

According to Bean, the rise of prediction markets threatens gaming jobs for tribal communities, particularly those in rural locations. That was echoed by California Nations Indian Gaming Association Chairman James Siva after Selig’s testimony.

“They can call these prediction markets. They can call them sports event contracts, but it is illegal sports betting with very little oversight,” Siva told Tribal Business News. “This is [without] exaggeration, the largest and fastest-moving threat our industry has ever seen in its 30+ year existence.”

Congress Questions CFTC Regulation During Hearing

During Selig’s testimony on Thursday, Representatives from both sides of the aisle appeared concerned about the seemingly light regulation around prediction markets. Rep. Jim Costa (D-Calif.) argued that the CFTC appeared to be acting “less like a market regulator and more like a body giving permission for these platforms.”

“In too many cases it’s just gambling by another name,” Costa said during the hearing. “I don’t believe Congress intended for sports betting to be repackaged as a financial product to dodge rules that apply to everyone else, including our tribes.”

Rep. Jim McGovern (D-Mass.) pointed out that Donald Trump Jr. is an advisor to both Polymarket and Kalshi, and asked if that had anything to do with the CFTC dropping investigations and legal battles with prediction markets last year.

“We do not pick winners and losers or engage in favoritism or bring politics into any of these matters,” Selig responded. “I think it’s insulting that you’re insinuating that we would play political games.”

But even Republicans on the committee had questions for Selig and the CFTC. Rep. Don Bacon (R-Neb.) pressed Selig on the issue of insider trading at prediction markets.

“I’ve seen some of the uncomfortable stories related to prediction markets in recent months, including the markets on Maduro’s ouster and the war in Iran,” Bacon said. “Markets settled just by words spoken on earnings calls, and a story about a journalist being threatened over his reporting. My question is: do you need more authorities?”

The hearing took place amid a growing legal battle between state regulators and prediction markets across the United States. Both sides have had victories in state and federal courts, suggesting the issue may eventually end up in the Supreme Court. The CFTC has come out in favor of the prediction markets in these cases, with the federal government preemptively suing three states to stop them from taking action against the industry.