Usually, at this time of year, CNIGA is primarily engaged in the legislative process at the state level. To be sure, CNIGA has endorsed legislation there; more on that later. However, this year we find ourselves deeply engaged at the federal level as the threat of prediction markets looms large over the tribal government gaming industry.
It is hard to understate how big a threat this is to not only our industry, but to tribal sovereignty, as well as individual state sovereignty for that matter. As I explained in our previous column, prediction markets have long been legitimate financial tools tied to commodities and risk management for agricultural producers against unforeseen events. These markets are overseen by the federal Commodity Futures Trading Commission (CFTC).
Since the end of 2024, these markets have evolved into platforms offering contracts on the outcomes of sporting events and an astonishing array of other activities, in what appears to be a clear violation of existing federal laws. Registered online exchanges such as Kalshi, Crypto.com, and Robinhood offer online access to these contracts and are available in all 50 states and tribal jurisdictions, despite any prohibitions from those bodies.
CNIGA has been engaging on various fronts to combat this problem. These efforts include a federal legislative push to find a vehicle that would address our concerns. To that end, CNIGA has participated in attempts to amend the Digital Asset Market Clarity Act, or simply the CLARITY Act, a major cryptocurrency market structure bill.
CNIGA is asking for two specific amendments to the CLARITY Act. The first of these is language to ensure that decentralized blockchain platforms, which the legislation exempts from state and federal oversight, do not preclude the Indian Gaming Regulatory Act, tribal-state compacts, and state gaming law.
The other requested amendment is that S.4160 – Prediction Markets Are Gambling Act, bipartisan legislation in the U.S. Senate that has been previously supported by CNIGA, is inserted into the Senate version of the CLARITY Act. This legislation seeks to prohibit any sports-related activity or any casino-style game from being listed or made available for clearing or trading on a registered prediction market entity.
The CLARITY Act had been scheduled for a vote in August, and at press time, it was delayed until September. If the CLARITY Act were to fail, it would be good news in that a new problem with decentralized blockchain platforms would be avoided. However, it would also mean the issue of using prediction markets for sports betting would still be without the legislative fix that S. 4160 would provide. CNIGA is currently looking at other legislative options just in case.
The legal landscape is still quite active surrounding the bill and is expected to remain that way in the coming months. At press time, there are now over 80 court cases contending with prediction markets in various jurisdictions at multiple levels of government. That number is up from 50-plus cases in early May. CNIGA has signed on to a procession of amicus briefs in several of these cases and continues to do so.
As I reported in the last column, the issue will very likely go to the U.S. Supreme Court. I can now report that a case in the Third Circuit will be the first of these that will be presented to that body and is on track to do so in early September. By the time this column is published, it should be known whether the Supreme Court will agree to hear this case.
The CFTC, which was never designed to regulate gambling, is now essentially run by a single, Trump-appointed commissioner, Michael Selig, who has championed the misuse of prediction markets right from his appointment earlier this year. One of the first actions the CFTC did under Mr. Selig was to draft and issue a proposed rule on prediction markets. CNIGA condemns this proposed rule. Under current regulations, the CFTC prohibits gaming contracts. The new proposed rule eliminates that prohibition on gaming entirely. In doing so, it seeks to codify the misuse of prediction markets. CNIGA submitted comments critical of this misuse while the proposed rule was being drafted.
While the issue of prediction markets, given the vastness of the threat, rightfully needs much attention, it is certainly not the only major issue with which we are contending. CNIGA has continued to hold consensus-driven sports wagering meetings open to all federally recognized tribes in California. The meetings have begun to bear fruit as broad contours of a potential sports wagering initiative have begun to emerge.
Our discussions have progressed to a point where I can report that we remain on track for a tribally led sports wagering initiative in 2028. Though many details are still being ironed out, at this point it is clear that this effort will be for the equal benefit of all tribes and that it will be organized under the auspices of the Indian Gaming Regulatory Act.
We will continue to hold meetings, and I am confident that we will continue to make great progress in the coming months.
Finally, as reported in the last column, CNIGA is supporting a pair of state bills, SB 1305 (Richardson) and AB 2167 (Macedo). The former, sponsored by the Tejon Indian Tribe, seeks to have the state create a roadmap for the reintroduction of grizzly bears in California. The latter, sponsored by Mooretown Rancheria, is a technical fix for a previous bill signed into law earlier this year regarding tribes receiving the same property tax exemptions during land transfers as other conservation-focused entities. AB 2167 would ensure that law functions as intended. Both bills are still in the legislative process, and I will report their respective fates in my next column.
