Can prediction markets coexist with tribal gaming? The question was tackled by the Indian Gaming Association (IGA) in its latest webinar.
Sporttrade CEO Alex Kane shared his perspective with IGA Executive Director Jason Giles and IGA Conference Chairman Victor Rocha. Sporttrade, a state-licensed betting exchange, is seeking federal approval from the U.S. Commodity Futures Trading Commission to expand nationwide in an industry that’s gaining traction.
This move marks a significant moment in the evolution of prediction markets, raising new questions about how these platforms fit within the broader regulatory landscape of gaming in the United States, especially in relation to tribal-state compacts and long-established oversight frameworks.
“Like the rest of the industry, we’re having a lot of conversations about prediction markets and what their place is. A lot of it is that we’re taken aback by the aggressiveness of (prediction market companies like) Kalshi, but you’ve been in the industry for a while longer. You pioneered this,” Rocha said to Kane.
Tribal governments maintain that Kalshi’s sports-event contracts not only undermine tribal sovereignty, but bypass the tribal regulatory structure, and are looking to the CFTC to state that sports-betting contracts are subject to federal and state laws. They also contend that the lack of oversight on prediction-market companies puts consumers at risk.
Kane described his company as a betting exchange, or like the NASDAQ stock exchange, which lists securities that match buyers and sellers.
“Sporttrade is very similar, in that our tickers aren’t stocks, but are outcomes of sporting events,” Kane said.
Giles praised Sporttrade for providing bettors odds that are more transparent than sportsbooks and not shutting people out if they’re successful at sports wagering.
“The existing model of odds was invented by sportsbooks, such that it obfuscates understanding what the hell is going on,” Kane said.
Rocha said the industry “feels so niche” and wondered if it’s as big a threat as everyone is saying. It doesn’t offer parlay wagers, a big money maker for sportsbooks.
Kalshi has maintained it’s not gambling, while Sporttrade is saying it is, which is the aboveboard approach, Rocha added.
“Claiming that this isn’t gambling nullifies everything you’re going to say after that,” Kane said. “What we have to offer the industry requires real interaction. While we can agree it’s a niche, it’s not an entire sports-betting universe and should exist. It’s great for consumers.”
Kane said consumer protections and league integrity are important standards companies should follow.
Sporttrade is licensed in New Jersey, Arizona, Colorado, Iowa, and Virginia. It also works with the Quechan Indian Tribe of the Fort Yuma Indian Reservation in Arizona.
“You attempted to go the regulated route, and then you have other companies trying to run laps around you,” Rocha said.
From the tribal perspective, Rocha said they don’t hate everything they see about the sports wagering industry. They’ve just had bad experiences with the big companies telling tribes how it’s supposed to be.
Kane said nothing prevents tribes from participating in the federal construct. Larger tribes might have a big advantage to get involved. “Maybe I want to build a digital advantage where we might have to wait three or even up to eight years for a digital option for sports betting in California,” Kane said. “There’s a legal way. You can introduce patrons to a brand, create a relationship, and own the monetization of that customer by being the broker that routes orders to exchanges and charges a commission for that service. And that isn’t a loophole.”
Rocha was critical of companies like Kalshi “running really fast and trying to break things and has no interest in participating in these conversations.” Tribes are responding as they do with other threats, and tribes see this as a threat, he noted.
“Alex is the first to say we’re regulated and already working with tribes and this is how our relationships are going,” Rocha said. “It’s a matter of time before this goes to court, and that’s what we’re looking at (when it comes to others).”
Rocha asked how Sporttrade would work in California if there were relationships with tribes.
Kane responded that it wouldn’t be like what FanDuel, DraftKings, and others tried to do in passing legislation that would have helped them corner the digital market.
“They want to bring into states what they’re offering in every other state,” Kane said, saying the fear is the operators would come in and steamroll tribes.
“I don’t think about entering in a way like DraftKings or FanDuel would do, carpet bombing the whole state with billboards and TV ads. We wouldn’t come into a jurisdiction and say we know what’s best. We say we’re experts in trading and give you great execution and if you route orders, we’ll give your customers phenomenal prices they wouldn’t get anywhere else.”
Rocha said if event contracts aren’t considered gambling in the end, then it wouldn’t be considered a violation of IGRA or the Wire Act and open possibilities for tribes. “That’s still to be defined, by the way,” Rocha said.
