Tribes warn CFTC transfer on sports activities prediction markets would undermine gaming compacts

A push by federal regulators to categorise sports activities betting as a monetary product is drawing sharp opposition from tribes, who say it might undermine tribal gaming compacts and redirect billions in income.

The concern follows congressional testimony Wednesday by U.S. Commodity Futures Trading Commission Chairman Michael Selig, who signaled assist for permitting federally regulated prediction markets to supply contracts tied to sports activities outcomes.

Tribal officers say the strategy blurs the road between federally regulated “event contracts” and state-authorized sports activities bets, threatening a long time of negotiated exclusivity beneath the Indian Gaming Regulatory Act.

In the House Agriculture Committee listening to, Selig described sports-related prediction markets as swaps ruled by the Commodity Exchange Act — not wagers topic to state or tribal gaming legislation — a distinction tribal leaders rejected throughout a press name Wednesday forward of the listening to.

“If the federal government decides these are commodities instead of bets, it wipes out the foundation of tribal exclusivity,” stated Indian Gaming Association Chairman David Bean throughout a press name. “That’s not modernization — that’s erasure.”

Selig advised lawmakers that prediction markets might “play a role in price discovery” and stated he was open to increasing eligible occasion contracts.

Later within the listening to, Rep. Jim Costa (D‑Calif.) pushed again, saying the merchandise “aren’t some new harmless financial product.”

“In too many cases it’s just gambling by another name,” Costa stated, warning that betting on “sports, politics, in some cases even on war, instability and human suffering” undermines each public belief and tribal compacts.

Costa added that California’s 106 tribal governments rely on “carefully negotiated tribal‑state compacts,” and cautioned that the CFTC dangers “looking less like a market regulator and more like a body giving permission for these platforms.”

When Selig responded that the company was taking its authority critically and had issued an advance discover of proposed rulemaking, Costa countered: “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. Gabe Vasquez (D‑N.M.) echoed these considerations, saying customers “couldn’t care less if they were using an official sportsbook.”

“Tribes in my district have gone through decades‑long negotiations, agreements and settlements,” Vasquez stated.

“When a federal agency allows prediction markets to bypass these longstanding requirements, it undermines tribal sovereignty and state protection.”

He cited the Pueblo of Laguna as one instance of communities “losing out on vital revenue.”

When Selig replied that such markets might hedge danger and would stay beneath CFTC oversight, Vasquez pushed again.

“With all due respect, I don’t think this is hedging. This is a bet that’s clearly sports gambling. If this product looks like sports betting, the public should expect sports‑betting‑type protections and regulations,” Vasquez stated. “At the end of the day, this comes down to a simple question: Are we regulating real economic risk, or are we allowing prediction markets to steal billions of dollars in an unregulated free-for-all as Congress and CFTC turns a blind eye?”

The CFTC’s written testimony and appendices go additional, asserting that state playing legal guidelines are preempted when utilized to CFTC‑regulated occasion contracts. Enforcement Director David Miller warned that sports activities damage and participant‑efficiency contracts pose “acute risks of manipulation and insider trading,” however framed these considerations as issues of market integrity — not gaming enforcement.

For tribal governments, that distinction is existential. If sports activities‑associated prediction markets are handled as swaps slightly than wagers, tribes lose each regulatory management and exclusivity, successfully sidelining state‑tribal compacts in favor of federal oversight.

“Prediction markets threaten these rural jobs and the progress that we’ve achieved by violating our laws, federal laws, and the laws of our state government partners,” Bean stated. “Pull up your Kalshi app for one second, and you’ll see the same bets that are offered in every other legal sportsbook.”

The CFTC’s proposed rule on prediction markets, launched March 12, would outline the sorts of occasion contracts that designated contract markets could listing. The company opened a forty five‑day remark interval that has drawn a whole lot of submissions from state regulators, teachers, sports activities organizations, and tribal governments.

A media briefing ready for the listening to stated Congress “clearly wrote the CEA to prohibit contracts tied to gaming” and warned that federally permitted sports activities contracts would “undermine state laws and regulatory systems nationwide.”

The briefing additionally famous that sports activities wagering is a state‑regulated exercise beneath the Supreme Court’s 2018 Murphy v. NCAA choice.

California Nations Indian Gaming Association Chairman James Siva stated Selig’s testimony strengthened fears that the CFTC is shifting shortly with out consulting tribes or states.

“There is no way around it. They can call these prediction markets. They can call them sports event contracts, but it is illegal sports betting with very little oversight,” Siva stated. “This is (without) exaggeration, the largest and fastest‑moving threat our industry has ever seen in its 30 plus year existence.”

About The Author

Staff Writer

Chez Oxendine (Lumbee-Cheraw) is a employees author for Tribal Business News. Based in Oklahoma, he focuses on broadband, Indigenous entrepreneurs, and federal coverage. His journalism has been featured in Native News Online, Fort Gibson Times, Muskogee Phoenix, Baconian Magazine, and Oklahoma Magazine, amongst others.

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