As the legal fight heats up in California between tribes and companies that offer sports events contracts, the Indian Gaming Association is ramping up its efforts to back tribes and spread the message about the threat to tribal sovereignty.
Last week, three California tribes sued Kalshi and Robinhood in federal court, demanding that the prediction market offerings they label as illegal sports betting be banned from tribal lands.
IGA hosted a webinar this week called “The New Normal: Prediction Markets in Real Time – What Tribes Need to Know Now” in response to operators flooding states with the sports event contracts regulated by the Commodity Futures Trading Commission.
Victor Rocha, conference chair of the IGA tradeshow and webinar host, said the landscape around prediction markets is shifting fast. On Monday, Brian Quintenz, a member of Kalshi’s board, appeared before the Senate for his confirmation hearing to lead the CFTC, signaling a potentially pivotal moment for how these markets are regulated.
Besides the California lawsuit in federal court, Polymarket is making headlines with its return to the U.S. market, raising urgent questions about jurisdiction and enforcement, Rocha said.
Rocha was joined on the webinar with Jason Giles, Executive Director of IGA, and Chris Gerlacher, a political analyst with Prediction News.
“As these platforms push deeper into regulated space, tribes need to understand what’s happening now, what’s at stake, and how to prepare for what’s next,” Rocha said, adding it’s been a “conversation about power, policy, and protecting tribal interests in real time.”
Gerlacher said Quintenz is expected to be approved out of committee on a party-line vote even though there’s some political baggage with his Senate confirmation.
“I know the American Gaming Association and the tribes have all been pushing back against the gaming policy of the administration, and the expansion of sports contracts is a big conflict between the gaming industry and finance industry now,” Gerlacher said.
One issue is that Quintenz said he would not divest his holdings in Kashi as a board member and as a stock holder for more than 90 days after his confirmation.
Giles said Quintenz raised the ire of Kalshi competitors by trying to get a look at proprietary information of those other companies without being confirmed.
“The innocent reading is he wants a head start on these issues (of regulation),” Gerlacher said. “It’s a bad look, but there’s also nothing concrete out there of wrongdoing.”
Giles said IGA has had a big problem on a policy level with companies, for example, offering wagers on whether the Ukraine President Volodymyr Zelenskyy wears a suit before July. What is the justification for that, especially when there’s a dispute over the payout from those who bet against him doing so, even though he wore a suit to a NATO summit in late June, he said.
“That’s a public policy debate. I would think the senators from Utah, Texas and other anti-gambling states would want to have that discussion, but we haven’t had it as a country,” Giles said.
When tribal gaming started with bingo, governors and state lawmakers came down hard on Indian Country – a game played in churches and fire houses across the nation, Giles said.
“All of a sudden when tribes did it on the reservation it was a moral imperative that this country get a handle on Indians and their gambling on the reservation,” Giles said. “Now we have this going on with the CFTC and nary a word from Utah or these other tough states like Alabama and Texas that would come down hard on tribes. That’s the disparity. We see how tribes were treated 40 to 50 years ago over bingo, and now we have this going on with ludicrous bets.”
In the California lawsuit against prediction markets, Gerlacher said what’s unusual about the case is that Kalshi is a defendant for the first time instead of them filing lawsuits against states. Tribes have gaming authority on reservations under the Indian Gaming Regulatory Act.
Kalshi has sued states such as Nevada for issuing cease-and-desist letters to the operator. Rocha said he sees the cases ending up at the Supreme Court.
“It will be interesting to see what Kalshi looks like on defense,” Gerlacher said. “We will see a broader range of arguments.”
Giles said what’s interesting about the California case is the allegation from tribes including RICO, the federal Racketeer Influenced and Corrupt Organizations Act. There are complaints against the companies about violating tribal sovereignty and tribal gaming ordinances governed by tribal gaming commissions.
“I know people are bringing up that (tribes have a monopoly in states like Florida and California),” Giles said. “We didn’t set up this monopoly, and we’re trying to mind our own business on the reservations by offering bingo and other stuff. States are the ones that came in and demanded a seat at the Indian gaming table with IGRA where there’s negotiated compacts and the state gets a cut. We have to protect our industry like our lives depend upon it.”
In response to a question from Rocha, Gerlacher said he doesn’t think these prediction market companies would be willing to geofence the reservations so their sites aren’t available there. They want to be a national exchange and be available to everyone, he said.
“I think you will have a large bloody fight over geofencing, and I don’t think they want to do it,” Gerlacher said. “And if the suits against Kalshi and Robinhood don’t work, I think you will see lobbying Congress and going after the CFTC.”
Giles said senators he’s talked to are shocked that the CFTC is getting involved in gambling when their main focus is agricultural products.
“I almost feel sorry for Brian Quintenz if he gets the job,” Giles said. “He has to do the normal agricultural stuff and now all the sports betting and now crypto. He’s so flippant about how the CFTC is the greatest regulatory market in the world, and no one asked him what is basing that on. There’s got to be more to it than this small agency that just doesn’t have the staff let alone the expertise. It’s frustrating for the gambling industry.”
Gerlacher said when the CFTC has to regulate cryptocurrency as a commodity there’s going to be a lot of work required, and he pointed out that the agency recently cut staff.
Giles said he’s surprised there hasn’t been more said from the U.S. sports leagues about the lack of regulation and oversight. It took a Supreme Court decision to legalize sports wagering nationwide, and there’s been sports betting scandals with athletes.
“It can only get worse, especially if you’re going to use crypto,” Giles said.
The reason for that, Gerlacher said, is that if Kalshi prevails in their legal cases and is federally regulated in every state, sports leagues will want to partner with them.
Rocha said these early entrants in nationwide sports wagering instead of state-by-state regulation will have control over the industry, and the tribes will be left out.
“That’s why tribes are fighting so hard because it feels like the thumb is on the scale,” Rocha said.
