NEW YORK - Prediction markets are a huge threat to state and tribal sovereignty and are already eating into the revenue generated by tribal casinos, two gaming leaders said Wednesday.
“These prediction markets are the biggest threat to gaming in this country we have seen,” said James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), during a panel at NEXT.io’s New York Summit.
- Tribal gaming leaders in California and Oklahoma say federally regulated prediction markets are reducing tribal casino revenue and threaten both tribal and state sovereignty.
- Because those states lack legal online sports betting, prediction markets are attracting gamblers who might otherwise visit tribal casinos.
- Tribes are responding with lawsuits, legal briefs, and efforts to legalize tribe-led sports betting to protect their gaming interests.
Tribes are particularly protective of their gambling rights because it is an expression of their sovereignty and a way for them to raise revenue for their communities. However, Siva said the risk presented by prediction markets goes for both commercial gambling and tribal gambling.
Matthew Morgan, chairman of the Oklahoma Indian Gaming Association, echoed Siva’s stance and said prediction markets are already having an impact on tribal casino revenue. He pointed to last year’s NBA championship run by the Oklahoma City Thunder, when Kalshi bought billboard ads in the state, nudging them to make a bet in a state where Native American tribes have certain exclusive rights for gambling.
“It is the largest existential threat we’ve seen in a long time to tribal gaming,” Morgan said.
That threat looms larger given California and Oklahoma have not authorized any state or tribal-run forms of online sports betting. Federally regulated prediction markets are operating in those states anyway, offering a de facto form of sports wagering via event contracts.
This means prediction markets are acquiring customers that might otherwise be visitors to tribal casinos or prospective clientele for when some kind of sports wagering is authorized.
Both tribal gaming execs aligned on prediction markets. They see it as a huge threat to both state and tribal sovereignty, and something that is already eating into their gaming revenue. Morgan gave the example of a Kalshi billboard in OKC during Thunder’s NBA championship run.
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There is also the scary thought (for casino operators) of prediction markets finding a way to offer event contracts on the spin of a roulette wheel or hand of blackjack, which would be much more directly in competition with brick-and-mortar gambling facilities.
Moreover, with every day that passes, customers could become more difficult to pry away from prediction markets and back to state-level gaming. Given that the current administration in Washington has seemingly given the green light to what prediction markets are doing, and that legal action will take time, it’s unlikely that prediction markets will be going away anytime soon.
“Once you give the consumer a product, it's very hard to take it away from them,” Siva said. “And (prediction markets) just continue to grow their database and control and continue to grow their revenue day after day, month after month.”
Perhaps with this in mind, Native American gaming tribes are taking action against prediction market operators. They are filing legal briefs in ongoing courtroom battles over the legality of sports event contracts, and some tribes have filed lawsuits of their own, such as the Ho-Chunk Nation in Wisconsin.
X marks the spot
Those lawsuits could be an “X-factor,” Siva said. The cases involving state-level gambling regulators revolve around whether federally regulated prediction markets can be forced to bow to state regulations. Tribal lawsuits involve another federal law, the Indian Gaming Regulatory Act.
“Once the tribal amicus briefs entered into the discussion, I really feel like that was the lever that was pulled that we saw some of these really pausing, because suddenly that preemption argument doesn't make so much sense when you're saying, ‘I have a fellow federal statutory provision that says this,’” Morgan said.
Siva said the tribes are speaking with lawmakers in Washington and forming alliances with partners that were previously unfriendly, united by the threat of prediction markets.
“It's hurting our revenues now,” Siva said. “And I think we need to really get that message out there. And it's not just California, it's not just Oklahoma, it's not just tribes, it's not just tribal sovereignty. State sovereignty is being violated in all 50 states.”
Tribes are playing some offense, too. In California and Oklahoma, efforts are underway to bring legalized sports wagering to those states via the tribes. While those efforts are complicated by the numerous tribes and differing perspectives involved, both Siva and Morgan were optimistic about their prospects.
Siva said people should keep their eyes on California and suggested there is a tribe-led vision for online sports betting in the works. He said the focus is on ensuring the mobile option is “tribally led, tribally driven, tribally owned.”
That is likely due in no small part to the costly 2022 ballot measure battle fought by California tribes and online sportsbook operators over the fate of legal sports betting in the state. Ultimately, two sports betting measures failed, including one advanced by major online gambling operators.
“We will get there,” Siva said. “We are trying to work on something that will be not just foundational but will truly, in my opinion, set the standard for what tribes can do moving into online gambling in the future.”
Asked to predict what they’ll be talking about a year from now, Siva hoped that prediction markets such as Kalshi would be in their “rearview” and that California tribes would be ready to publicly announce what they’ve been working on with regard to online sports betting.
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In Oklahoma, tribes and state lawmakers have been trying to hammer out a sports betting framework that both can live with. Morgan suggested Wednesday that they've now managed to cobble together a proposal that they think will garner support among tribes and legislators.
Still, the legalization of sports betting in Oklahoma is further complicated by the opposition Gov. Kevin Stitt has to any tribe-controlled version of sports betting. So, while Morgan says they feel like there is “momentum” this year for legalizing sports betting (including a possible mobile option), he also believes Stitt won’t sign any tribe-centric bill that reaches his desk.
All that said, Morgan suggested the state legislature could try to override the governor’s veto. What’s more, with prediction markets now looming over everything and challenging the historical control states have had over gambling, the tribes are even meeting with the governor’s office to discuss that challenge.
Oklahoma has seen an explosion of “illegal operators,” Morgan said, including sweepstakes casinos that the tribes are trying to address via legislation that is making progress.
“We’re really coming at sports betting not as a way to drive revenue but more to protect our interests and what we have in Oklahoma,” Morgan said.
