Prediction markets challenge tribal casinos’ hard-won place in US gambling

EDGEWOOD, N.M. (AP) — At the Indian Gaming Association’s annual convention in San Diego this week, two words have dominated the agenda: Prediction markets.

On public panels and in closed-door meetings, tribal leaders have discussed the explosive growth of platforms like Polymarket and Kalshi and the potential threat to tribes’ hard-fought and heavily regulated place in the American gambling industry.

Tribal gambling enterprises generate more than $40 billion a year, revenue that funds healthcare, housing, education and other social services in Native American communities. On prediction market apps, billions of dollars exchange hands during major events like the Superbowl.

Indian Gaming Association Chairman David Bean has accused prediction markets of misrepresenting their products to sidestep a carefully negotiated framework of federal, state and tribal laws.

“This is no innovation,” Bean said Wednesday during a news conference. “This is unlawful gambling dressed up as finance.”

The association called on Congress to clamp down on prediction markets and announced a defense fund to support legal actions against the platforms.

Kalshi, Polymarket and Robinhood say their users are engaging in futures trading, not gambling. They dispute claims that they are circumventing regulation.

What are prediction markets?

Prediction markets allow users to wager on the outcome of virtually any event from the NCAA tournament to the war in Iran. Once a niche experiment embraced in political science circles, these platforms have exploded in popularity andcontroversy since the 2024 election.

Market operators say their customers are trading against peers by buying and selling “event contracts.” They argue that their product is distinct, and should be regulated by the Commodity Futures Trading Commission like crop or oil markets.

The commission is considering new rules for prediction markets. But the Trump administration has so far backed the platforms, which are facing lawsuits from more than a dozen U.S. states and four tribal nations.

What’s the origin of tribal gambling?

In the 1970s during what’s known as the tribal self-determination era, tribes were looking for tools to lift their communities out of poverty. Bingo halls and card rooms sprang up in community gyms and under makeshift structures on reservations nationwide.

Patrice Kunesh, a fellow at the Brookings Institution, said tribes, which are limited in their ability to levy taxes, used this new revenue stream to rebuild their governments after decades of federal control.

“Tribes were asserting sovereignty. That rankled the states,” Kunesh said.

After a 1987 U.S. Supreme Court decision blocked California’s bid to shut down card rooms on two reservations within its borders, states lobbied Congress for a role in regulating tribal gambling. The result was the 1988 Indian Gaming Regulatory Act, a complex regulatory scheme that Kunesh called a compromise for tribes.

The law expanded the types of gambling tribes could offer, clearing the way for the ad hoc bingo halls to grow into sophisticated Vegas-style casinos and a multi-billion dollar industry. The Indian Gaming Regulatory Act also imposes strict standards and requires tribes to negotiate gambling compacts with states.

Could prediction markets threaten tribes’ share of the market?

Tribal gambling is no stranger to competition. When the Indian Gaming Regulatory Act was passed in 1988, commercial casinos were legal in only two U.S. states. That number has since grown to 27. Today the industry contends with legal sports betting in 39 states and the rise of online casinos.

Former National Indian Gaming Commission Chairman Jonodev Chaudhuri says prediction markets are unique in that they’ve exploded onto the online gaming market seemingly overnight with minimal oversight. He described the mood at this year’s Indian Gaming Association convention as one of collective worry.

“There’s an intensity in the discussions that is more pointed than I’ve seen perhaps ever in these rooms,” Chaudhuri said.

The Indian Gaming Association said studies of the industry-wide financial impact are underway.

How are tribes challenging prediction markets?

Four tribal nations have sued Kalshi and Robinhood in federal court, accusing the platforms of violating federal law and state-tribal compacts. In court filings, those platforms say they are operating financial markets, not casinos or sportsbooks, and aren’t doing business on tribal lands.

Among those legal challengers is the Ho-Chunk Nation, one of 11 federally recognized tribes with exclusive gambling rights under a compact with the state of Wisconsin. Ho-Chunk President Jon Greendeer called it a David and Goliath fight with his tribe’s social safety net hanging in the balance.

“We’re taking on somebody who makes more money on one event than we do in an entire year,” Greendeer said.

The Indian Gaming Association has filed briefs in support of a growing wave of lawsuits against prediction market platforms and are marshaling resources for their own potential legal fight. Asking Congress to take action isn’t a sure bet, considering the Trump administration backs the prediction markets industry.

“We’re seeing some hesitancy from lawmakers who don’t want to upset the big boss,” Bean said.

How much money does tribal gambling generate?

Tribal gambling enterprises generated nearly $44 billion in 2024, a record, according to the National Indian Gaming Commission.

Fewer than half of the nation’s 576 federally recognized tribes offer some form of gambling. Many tribal casinos, particularly those in rural areas, generate enough revenue only to pay for basic government operations and social services.

According to Kunesh, the costs of complying with the Indian Gaming Regulatory Act take a significant bite out of tribes’ revenue. The law also positions states to negotiate revenue sharing agreements with tribes, often in exchange for some degree of exclusivity.

“People think tribes are making money hand over fist. That’s a terrible misunderstanding,” Kunesh said.