Why Tribal Regulators Say Prediction Markets Are Bypassing Gaming Law

The Indian Gaming Regulatory Act, passed in 1988, gives tribes the exclusive right to regulate Class I gaming (traditional social and ceremonial games) on their own, and to regulate Class II gaming (bingo and similar games) largely without state involvement. Class III gaming, which covers most casino-style games including slot machines, table games, and sports wagering, is different: a tribe can only offer it under a tribal-state compact, an agreement negotiated with the state and then approved by the federal government.

Compacts typically give the state some regulatory oversight and a share of tribal gaming revenue in exchange for the tribe's right to operate. The structure took nearly four decades to build out state by state, and it is the backbone tribal gaming leaders say prediction-market operators are sidestepping entirely.

The Senate Committee on Indian Affairs, chaired by Lisa Murkowski with Vice Chair Brian Schatz, convened a roundtable titled 'Tracking Prediction Markets' Exponential Growth: Tribal Implications and Beyond' on August 4, 2026. Witnesses included Indian Gaming Association Vice Chairman Tehassi Hill, National Congress of American Indians President Mark Macarro, National Tribal Gaming Commissioners & Regulators Chairman Jamie Hummingbird, Ohio Solicitor General Mathura Sridharan, and Public Health Advocacy Institute gambling policy director Harry Levant.

Hill, who also chairs the Oneida Nation, told the committee that tribes 'oppose the use of prediction markets to offer sports and casino-style gambling outside the regulatory framework established by Congress under the Indian Gaming Regulatory Act.' He added that tribal governments collectively spend more than $450 million a year on gaming regulation and employ over 6,000 gaming regulators, an infrastructure he argued prediction-market platforms operate entirely outside of.

Macarro's position, as characterized in coverage of the roundtable, was that Congress never intended the Commodity Exchange Act to override IGRA, and that allowing a CFTC-registered derivatives exchange to list sports-outcome contracts amounts to a federal regulatory workaround around tribal sovereignty, reached without the government-to-government consultation IGRA and related federal policy require before touching tribal gaming interests. Hummingbird's testimony framed the same point in operational terms: tribal gaming already runs on licensing, auditing, and consumer-protection safeguards built up over nearly forty years, and prediction markets bypass all of it by classifying the same wagers as derivatives instead of gaming.

The argument tracks the same theory state gambling regulators have pressed in court against Kalshi, Polymarket, and other operators, that a federal derivatives registration does not automatically preempt a separate, longstanding regulatory scheme covering the same underlying conduct. What is different here is the specific federal statute at issue, IGRA and the tribal-state compact system, rather than a state's own gambling code.

Witnesses pressed the committee to support S. 4160, the Prediction Markets Are Gambling Act, a bipartisan bill introduced by Sens. Adam Schiff, John Curtis, and Catherine Cortez Masto that would amend the Commodity Exchange Act to bar CFTC-registered entities from listing contracts tied to sporting events or casino-style games such as slot machines, blackjack, and roulette. They also asked for amendments to the CLARITY Act to close what they characterized as loopholes for decentralized-finance platforms and to expressly preserve state and tribal regulatory authority over gambling.

No legislation was introduced at the roundtable itself. Neither Kalshi nor Polymarket sent a witness to respond to the testimony directly.

The tribal argument arrives alongside, rather than instead of, the state-level preemption litigation already working through seven federal circuits, including Utah's August 4 summary judgment against Kalshi and Connecticut's August 10 injunction denial. Tribal gaming regulators are not parties to those cases, but their testimony adds a distinct constituency, and a distinct federal statute, to the argument that CFTC registration should not be read as blanket preemption of every other regulatory scheme touching the same contracts.

Because IGRA compacts are federally approved agreements rather than purely state statutes, a future legal challenge grounded in IGRA rather than state gambling law would raise preemption questions courts have not yet had to resolve in this specific context. No tribe or tribal gaming commission has filed such a case so far, but the roundtable signals where a future challenge could originate if state-level rulings keep splitting the way they have this summer.