Indian Gaming and Prediction Markets: On a Collision Course?

Globally, monthly trading volume on certain major platforms has risen from under $5 billion in September of 2025 to about $24 billion as of April 2026. One analyst has recently predicted that total trading volume could reach $1 trillion per year in 2030. (Whether one of the platforms will let him buy an event contract on that outcome remains to be seen.)

The rapid growth of these platforms poses a potentially disruptive challenge to the Tribal gaming industry. Because Tribal governments often have narrower tax bases than state and local governments due to trust land status, jurisdictional limits and economic conditions, many Tribes rely heavily on gaming revenues to fund government services and activities. Gaming products, or products that bear similarities to gaming products, that divert gaming activity and regulatory authority away from Tribes can affect both Tribal economies and Tribal sovereignty.

Origin and Purpose of Indian Gaming
In 1987, in California v. Cabazon Band of Mission Indians, the U.S. Supreme Court held that because California’s gaming laws were regulatory rather than criminal in nature, the regulation of gaming activity fell outside the state’s limited jurisdiction in Indian Country, and the state could therefore not enforce its gaming regulations against Tribal gaming operations on Indian lands. 480 U.S. 202. This decision reinforced the principle that Tribes retain sovereign authority over gaming on their lands, and it recognized the significant federal and Tribal interests in promoting strong Tribal economies and self-government.

In response to Cabazon, Congress enacted the Indian Gaming Regulatory Act (IGRA) in 1988 to create a comprehensive framework for gaming on Indian lands. Under IGRA, certain types of gaming (like traditional or ceremonial Indian gaming, social gaming with minimal prizes or bingo games) can be offered and regulated by Tribes without state interference. Other types of gaming, dubbed “Class III” gaming, including casino-style games like slot machines, card games and roulette, but also including sports wagering, can be conducted by Tribes on their lands only if the Tribe has entered into an agreement (called a “compact”) with the state in which the Tribe is located. IGRA represents a “delicate balance [of] sovereignty” where Tribes retain regulatory authority over gaming and the economic benefits associated with it, states receive a role in negotiating compacts for certain forms of gaming, and the federal government provides oversight through the National Indian Gaming Commission and the U.S. Department of the Interior. See Pauma Band of Luiseno Mission Indians v. California, 813 F.3d 1155, 1160 (9th Cir. 2015) (“Congress attempted to strike a delicate balance between the sovereignty of states and federally recognized Native American tribes.”) The express purposes of IGRA are (among other things) “to promote tribal economic development, self-sufficiency, and strong tribal governments” and “ensure that tribes are the primary beneficiaries of gaming revenues.” 25 U.S.C. § 2702.

Economic Benefits of Indian Gaming
As intended, Indian gaming under IGRA has fostered Tribal economic development. Since the 1990 census, two years after the enactment of IGRA, the real income per person of the average Native citizen living on an American Indian reservation has grown by 63%. The most recent report by the National Indian Gaming Commission (NIGC) found that Gross Gaming Revenue on Tribal lands was $43.9 billion in 2024. NIGC Acting Chairwoman Sharon Avery stated that the report “reflects … the dedication of tribal leadership in preserving and growing this important economic driver for their communities,” and “the continued success of Indian gaming is a testament to the strong tribal governance and sound regulation that protects the integrity of the industry.”

Tribal gaming is important to the economic health of Tribal communities. It increases employment opportunities in sectors such as tourism and entertainment, contributes funds to education and welfare programs, and facilitates investments in built infrastructure and internet access. A 2019 study found that members of Tribes who grow up in a county with a casino are about 4 percentage points more likely to have a high school diploma and about 5.7 percentage points more likely to have an associate’s degree. Over the last 30 years, coinciding with the development of Indian gaming, high school graduation rates on Tribal lands have increased by almost 40% and minor crime rates amongst 16- and 17-year-olds have decreased by 22%.

Competitive Threats to Indian Gaming
Prediction market platforms are not the first competitive threat to Tribal gaming. In 2018, the Supreme Court, in Murphy v. NCAA, held that the Professional and Amateur Sports Protection Act (PASPA), which prohibited state-sanctioned sports gambling, violated the anticommandeering doctrine under the 10th Amendment. 584 U.S. 453. The Murphy decision eliminated the federal ban on sports gambling, and opened the door to state-authorized sports wagering, and sports betting has since expanded rapidly across the country. As of 2025, 38 states permitted sports betting and 30 allowed bets to be placed by mobile phone.

Tribal participation in sports betting is complex and uneven. Because Class III gaming remains governed by IGRA and Tribal-state compacts, whether a particular Tribe is able to offer sports betting depends on the state in which the Tribe is located, and the terms of the Tribe’s gaming compact with the state. Since sports betting is now offered remotely, through mobile apps and websites, and not just in physical casinos, competition for bettors is no longer constrained by geography. Interior regulations recognize that compacts may address statewide remote wagering or internet gaming, so long as the compact provisions are directly related to gaming activity on Indian lands and preserve Tribal regulatory authority. In a market that is no longer tied to the casino floor, sports betting may threaten Indian gaming by diverting customers from physical casinos; on the other hand, some Tribes, such as the Seminole Tribe of Florida (who own and operate the Hard Rock brand of hotels and casinos) have begun offering remote sportsbooks of their own to users located outside of the Tribe’s lands.

Even for Tribes that are able to offer sports betting, competition from non-Tribal sports-betting operators also poses a threat to Tribal economic development where states authorize those non-Tribal sportsbooks to operate in the same market as Tribal casinos. For example, in 2021, the Arizona Department of Gaming adopted rules allowing up to 20 event wagering licenses in the state, reserving half for Tribes and half for owners of Arizona professional sports teams or franchises.

Prediction Markets as the Latest Threat
Prediction markets present the latest threat to Tribal gaming because they offer betting-like products outside of the framework not only of IGRA, but of other gaming laws and regulations altogether. The Commodity Futures Trading Commission (CFTC), acknowledging the recent growth in event contracts listed by CFTC-registered entities, has proposed a new regulatory framework for evaluating whether certain event contracts involve gaming (among other listed types of activities), thereby allowing the CFTC to prohibit those contracts from being offered. The impact of such a regulation, if adopted, is uncertain, since not all prediction market platforms are registered with (or regulated by) the CFTC.

Because prediction market platforms offer products that function similarly to sports bets and other kinds of gaming without being subject to IGRA or state gaming compact that govern Tribal sports wagering, some Tribes are claiming that prediction markets undermine Tribal economic development, self-sufficiency and self-governance. For instance, California Tribes contend that Kalshi’s activity “directly interferes” with their ability to govern themselves under Tribal law and impairs their sovereign right to regulate gaming on reservations. In effect, they argue, sports event contracts draw business away from Tribal casinos by allowing patrons to participate in Class III gaming from home, causing revenue losses that imperil Tribal government functions and services. These lawsuits are ongoing.

Conclusion
IGRA was enacted to preserve Tribal regulatory authority and ensure Tribes remain the beneficiaries of gaming on Indian lands. Kevin Washburn, a law professor at the University of California, Berkeley, and former Assistant Secretary for Indian Affairs at the U.S. Department of the Interior, has noted that, “Congress specifically intended the federal government and Tribes to regulate gaming activities on Indian lands.” Prediction markets present a new test—for regulators and courts—of how federal policies supporting Indian gaming, Tribal self-determination and economic development applies in a rapidly evolving competitive and technological landscape.

The authors wish to thank summer law clerks Ashwin Bhat and Gabrielle Ladun for their contributions to this alert.