Prediction markets remain one of the most crucial issues in Indian gaming as tribes challenge federally regulated sports event contracts in court in an unprecedented number of cases.
Currently, some 80 cases are filed in state and federal courts, with about 85% percent of the decisions going against prediction markets, according to Joe Webster, a partner with Hobbs Strauss.
“It’s been an incredible 18 months of litigation,” Webster said. “It’s a combination of various types (of lawsuits) in federal court, state court … companies suing states, states suing prediction markets, tribes suing these companies, private causes of action, various class actions, and other similar suits.”
Webster noted that only one federal appellate court has ruled in a case brought by a state against prediction markets. The U.S. Court of Appeals for the Third Circuit ruled 2-1 in May in favor of Kalshi, upholding a preliminary injunction that blocked New Jersey’s cease-and-desist order from March 2025.
The majority ruled that sports event contracts are financial instruments, or swaps, under exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). But in a dissenting opinion, Judge Jane Richards Roth argued that the contracts are indistinguishable from traditional sports betting and should remain subject to state gaming regulations.
“Of course, it’s ultimately only one court that really matters, which is going to be what the U.S. Supreme Court says about this,” Webster said Wednesday during the Indian Gaming Association’s New Normal webinar.
Webster expects New Jersey to file a petition for review with the Supreme Court by September 3, but it’s still unknown if the high court will take up the case. “I think there’s reason to think they might,” Webster said. “But whether it’s that case or one of these other cases, ultimately this will be resolved by the Supreme Court.”
Webster was joined for the hour-long discussion by Scott Crowell of the Crowell Law Office Tribal Advocacy Group, Victor Rocha, IGA conference chairman, and Jason Giles, IGA executive director.
In addition to the Third Circuit case, Webster said several cases at the appellant level have been fully briefed – Fourth Circuit, Ninth Circuit, and Sixth Circuit – where a decision could come any day. “I think we’ll see a split in the circuits, which for those who follow the Supreme Court is very significant in terms of whether the court decides to review a case,” Webster said.
Webster noted some crucial victories in cases in Utah, Washington state, New York, and Michigan.
Crowell agreed that the Supreme Court will ultimately decide the fate of prediction markets offering sports event contracts. But he believes the primary issue that the high court will have to confront is whether Congress, when it passed the Dodd-Frank Act in 2010 and amended the Commodities Exchange Act, intend to preempt “two centuries of jurisprudence by both tribes and states in terms of regulating gambling in their states and sports betting in particular.”
Crowell added that’s the point he and other gaming attorneys have made in filing tribal amicus briefs, as well as to inject the Indian Gaming Regulatory Act (IGRA) into their arguments.
“We lived with 25 years of understanding that the only gaming that can occur on Indian lands is gaming that is approved by tribes, and if it’s Class 2 by the National Indian Gaming Commission, in Class 3, by state compact,” Crowell said. “So this is illegal. The district court in Wisconsin said as much.”
“Clearly Congress didn’t” intend to preempt state and tribal law when it amended the CEA in 2018, Crowell said, adding that prediction markets can’t use preemption to say we can violate IGRA, and somehow Congress intended to overturn, preempt, or amend pieces of IGRA.
But Crowell warned that a standalone IGRA victory doesn’t get tribes where they need to be, because they’re competing for the multiple gaming space and to geofence wagers made on Indian lands is a “hollow victory.
“This is as much about the right of tribes and states to regulate gaming,” he said. “Being able to work out through the compact process or working through IGRA … entitles tribes to be able to engage in statewide mobile wagering and we need to win both arguments.”
Crowell said the issue with winning the IGRA argument alone means tribal gaming will fence off its land and prediction markets will just flood the zone off Indian lands with their product, so “standing alone, the IGRA arguments don’t get us where we need to go.”
“We’re all in the same boat against these prediction markets, with the states, with commercial gaming,” Giles said. “You know, folks that we still don’t get along with are weighing in and shouting their opposition to prediction markets.”
