Tribal Leaders Declare War on Prediction Markets. CFTC Weighs Its Next Move
The debate over prediction markets is far from cooling down. In fact, it’s intensifying more and more. Tribal gaming leaders have taken a hardline stance against them, arguing that they threaten their exclusive gaming rights. Meanwhile, tech-driven financial giants like Robinhood, Crypto.com, and Coinbase are pushing back, framing these markets as a modern tool for forecasting real-world events. At the heart of this battle sits the Commodity Futures Trading Commission (CFTC), struggling to define its regulatory position. Recent shifts within the commission suggest that prediction markets might not face a severe crackdown, but uncertainty still looms.
“A Backdoor to Sports Betting”
For decades, tribal nations have operated casinos under state-tribal compacts, exchanging exclusive gambling rights for revenue-sharing agreements. Now, prediction markets threaten to upend that balance. By offering contracts on sporting events and political races, these platforms function like sportsbooks but dodge state regulations.
The Indian Gaming Association (IGA) is sounding the alarm, calling on the CFTC to ban event-based contracts that could undermine tribal gaming revenue. “The IGA strongly urges the CFTC to make it clear that Sports Contracts are prohibited from being listed or made available for clearing or trading. Trading of Sports Contracts is gaming, violates state and federal law and is contrary to public policy for various reasons. Importantly, allowing Sports Contracts to be listed and traded will interfere with the sovereign right of tribes and states to exercise their police power to regulate gaming within their respective territories—a right long recognized by courts throughout the United States,” says IGA.
Other groups, including the Arizona Indian Gaming Association, California Nations Indian Gaming Association, and Tribal Alliance of Sovereign Indian Nations, are joining the fight. Their argument is simple: if these markets continue operating under federal oversight, they’ll siphon off betting dollars without following state laws.
Industry Giants Take Sides
Not everyone is eager to slam the brakes on prediction markets. While the American Gaming Association (AGA) shares concerns about unregulated competition, some of the biggest players in tech and finance see them as the next big thing.
“The AGA and our members have very strong concerns about the recent self-certification of what are essentially sports betting futures, which are currently available to retail customers in all 50 states. We believe these sports events contracts are problematic for a variety of public policy reasons,” says AGA.
Robinhood CEO Vlad Tenev has openly embraced prediction markets, calling them a revolutionary tool for forecasting real-world events. His company is already planning to introduce its own version. “First of all, I think prediction markets are the future of not just trading, but also information. I’ve been a big believer in the power of prediction markets for a long time — kind of a student of them — and I think prediction markets should be live for everything,” said Tenev.
Coinbase and Crypto.com also support their expansion, arguing that these markets provide valuable insights and should be treated as legitimate financial instruments. “I am excited about prediction markets and I think that the new CFTC chair Brian Quintenz is certainly very thoughtful on this topic and he’s going to have to figure out how to create a trusted environment where these things can be built in the United States so Americans can use them, but also make sure that consumers are protected,” added Coinbase CEO Brian Armstrong.
On the other side, Representative Dina Titus warns that prediction markets could serve as a “backdoor” to sports betting in states where it remains illegal. She insists that gambling regulation should stay at the state level, not in the hands of a federal agency like the CFTC. “I contacted the CFTC with my concerns about legalizing prediction markets on sports-related contracts. It is a backdoor way to allow sports betting in 50 states, ignoring consumer protections, responsible gaming, integrity monitoring, and state tax revenue rules and regulations,” Titus wrote on X.
Is the CFTC About to Change the Game?
The future of prediction markets is teetering on a knife’s edge, with the CFTC at the center of the storm. For now, the agency classifies platforms like Kalshi and Crypto.com as financial markets rather than gambling operators, and allows them to offer contracts on real-world events across all 50 states. But that stance is coming under heavy fire from tribal leaders, lawmakers, and traditional gaming operators who see it as a loophole that undermines state regulations.
In response to the growing controversy, the CFTC has announced a roundtable discussion to reassess its policies. This may be a signal of preparing for a course correction, one that could impose stricter oversight or even a ban on certain event-based contracts.
The agency has also asked Crypto.com and Kalshi to pause trading while it reviews their operations, but both companies have pressed forward. If regulators don’t act soon, they risk allowing an unchecked, federally regulated betting market to take root outside of state control.
Meanwhile, political shifts could reshape the landscape. If Brian Quintenz, a former Kalshi board member, is tapped to lead the CFTC under a second Trump administration, prediction markets may find a powerful ally in Washington. Quintenz has been vocal in his support for financial innovation, particularly in the crypto space, and could push for a more hands-off approach. However, fierce opposition from tribal nations and major gaming groups could turn this into a prolonged legal and regulatory fight.
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