Why It Matters
Tribal gaming leaders and state officials are escalating their fight against prediction markets, warning that unregulated online betting threatens billions in tribal revenue and undermines decades of gaming law. The Senate Indian Affairs Committee held a hearing on Tuesday, August 4, to examine prediction markets' exponential growth and their implications for tribes.
Bloomberg reported that President Trump backed the Commodity Futures Trading Commission (CFTC) as the sole regulator of prediction markets, siding with the agency's position that sports event contracts are swaps under its exclusive jurisdiction. That puts the administration on a collision course with tribal nations and 44 state attorneys general who argue that sports betting and casino-style gambling belong under state and tribal control per the Indian Gaming Regulatory Act (IGRA).
The Big Picture
Prediction markets have exploded in popularity: combined monthly trading volume on top platforms rose from under $5 billion in September 2025 to roughly $24 billion by April 2026. According to Pew Research Center, the number of listed event contracts has grown from roughly 220 in 2021 to more than 8,000 by May 2026.
The CFTC and prediction market platforms argue these contracts are derivatives, placing them under federal financial regulation. Tribes and states contend they're gambling products under existing gaming laws, including IGRA, which grants tribes exclusive jurisdiction over gaming on Indian lands.
The hearing came two weeks after the House Agriculture Committee's Examining Customer Protections and Market Integrity in Sports Event Prediction Markets hearing. In late July, a federal judge halted Minnesota's prediction market ban, siding with the CFTC. A day before the Senate hearing, Sixth Circuit judges appeared ready to side with states over Kalshi in ongoing litigation over regulatory authority. In April, the CFTC sued Arizona, Illinois, and Connecticut over their attempts to regulate prediction markets, and in July directed Kalshi not to cancel pending sports trades in Michigan, defying a state court order.
Michael Selig, the Trump-appointed CFTC chairman and currently the sole sitting commissioner, issued a Notice of Proposed Rulemaking on June 10 substantially revising the regulatory framework for event contracts by amending Rule 40.11 to determine whether event contracts are contrary to the public interest. Tribal gaming operations generated a record $46.2 billion in gross gaming revenue in fiscal year 2025, and tribes rely on that revenue to fund healthcare, education, housing, public safety, and infrastructure.
What They're Saying
Mark Macarro, President of the National Congress of American Indians, presented tracking data showing tribal facility revenue softening after prediction markets entered states without legal sports betting. "Congress never intended the Commodity Exchange Act to supersede IGRA," Macarro said, warning against a federal regulatory workaround that erodes tribal sovereignty without consultation.
Jamie Hummingbird, Chairman of the National Tribal Gaming Commissioners and Regulators and a citizen of the Cherokee Nation, said Congress must act before the problem becomes unmanageable. Witnesses emphasized that the IGRA framework has worked for over 30 years through negotiated tribal-state compacts, and that tribes employ more than 6,000 regulators overseeing age requirements and problem-gambling programs, while the CFTC has provided no formal consultation to tribes on the issue.
Political Stakes
Several governors have broken with the administration: Gov. Spencer Cox (R-UT) called Selig's stance "a joke," and Gov. JB Pritzker's (D-IL) office called a CFTC lawsuit an example of the administration "carrying water for companies driving well-documented and lucrative insider trading schemes."
For tribes, the stakes are existential, some councils are weighing cuts to public safety, education, and infrastructure budgets over revenue losses, and the Brookings Institution called it an existential threat to tribal sovereignty. The administration faces its own conflicts: Donald Trump Jr. serves as a paid adviser to Kalshi, and Truth Social is launching its own prediction market with Crypto.com.
Harry Levant of the Public Health Advocacy Institute warned the expansion of prediction markets "demands a public health response," and a Science journal article flagged risks of behavioral addiction and democratic manipulation from their gambling-like design.
The Bottom Line
Tribal gaming regulators and a group of senators are pushing to add a prediction market amendment to the Clarity Act. Sen. Lisa Murkowski (R-AK) and Sen. Brian Schatz (D-HI) sent a letter seeking an extended CFTC comment period and mandatory tribal consultation, and former Sen. Christopher Dodd (D-CT) recently wrote that Congress "had no intention" of letting Dodd-Frank override IGRA. Tribes and states are fighting to preserve regulatory authority over gaming, but the Trump administration's CFTC is aggressively backing prediction market platforms as federal financial instruments. The future likely holds a protracted legal and legislative battle that will determine whether tribal gaming compacts survive the prediction market boom.
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