The U.S. Commodity Futures Trading Commission (CFTC) has received several strongly worded letters of opposition to sports events contracts from tribal associations and federally recognized tribes.
Sports events, offered by prediction market companies such as Kalshi, are one area of regulatory contention across the United States of America. Others include online sweepstake casinos, crypto sportsbooks and specific daily fantasy sports contests.
Federal Loophole Concerns: Tribes Warn of Sovereignty Erosion
In total, ahead of a CFTC organized roundtable to discuss the issue of sports event contracts, a total of eleven tribal entities submitted letters:
- Arizona Indian Gaming Association
- California Nations Indian Gaming Association
- Confederated Tribes of Siletz Indians
- Elk Valley Rancheria, California
- Indian Gaming Association
- Jamestown S’Klallam Tribe
- Oklahoma Indian Gaming Association
- Santa Ynez Band of Chumash Indians
- Tribal Alliance of Sovereign Indian Nations
- Vetnos LLC and Chicken Ranch Rancheria Me-Wuk Indians of California
- Yuhhaviatam of San Manuel Nation
The letters submitted by tribes have identifiable themes, all of which oppose sports events contracts being permitted federally.
A primary concern is the protection of tribal sovereignty. Groups associated with tribal gaming assert that allowing sports-related event contracts infringes upon tribal sovereignty, as protected under the longstanding Indian Gaming Regulatory Act. They argue that federal approval of these contracts would create a loophole that bypasses tribal and state regulatory authority.
The Indian Gaming Association, an inter-tribal group of 124 federally recognized Indian Tribes wrote: “Allowing Sports Contracts to be listed and traded will interfere with the sovereign right of tribes and states to exercise their police power to regulate gaming within their respective territories—a right long recognized by courts throughout the United States.”
This sentiment was echoed by the California Nations Indian Gaming Association, which stated: “Allowing Sports Contracts to be traded on a national exchange would create a federal loophole to tribal and state sports betting regulations, effectively preempting a whole swath of laws enacted by sovereign governments seeking to protect the health, welfare, and safety of their citizens.”
Impact on State Revenue: Tribes Warn of Financial Fallout
A key issue in states where online (and sometimes retail) sports betting is not legalized is the influence of tribal gaming compacts. As Oklahoma looks to regulate online sports betting, Governor Stitt’s ambivalence towards legislating for tribal exclusivity looks to be the biggest roadblock to legalization.
Another common theme is an emphasis that such contracts violate state and federal laws, including the Commodity Exchange Act (CEA), which the CFTC oversees. It is argued that these contracts should be prohibited under the CEA’s provisions against gaming and activities deemed contrary to the public interest.
Several of the letters submitted emphasize that there are simply no regulatory safeguards for consumers federally. The California Nations Indian Gaming Association commented: “Unlike sports betting regulated by tribes and states, Sports Contracts do not operate under robust regulations to address problems such as gambling addiction, problem-gambling, or match-fixing, and they do not provide funding for states to mitigate the negative externalities of gaming.”
The Arizona Indian Gaming Association said: “The CFTC is not a gaming regulatory agency and lacks the expertise to oversee sports wagering or gaming markets. Expanding its jurisdiction into sports betting through Sports Contracts would conflict with existing gaming regulatory frameworks.”
A concern shared across all groups in opposition is the economic impact, not just on tribal revenue but also on state tax receipts. Tribes (and likewise government agencies) fund essential services such as healthcare, education, and infrastructure, and the letters argue that permitting sports event contracts erodes state revenue and causes damage across states.
The Indian Gaming Association wrote: “Sports Contracts diminish the market share for regulated sports betting, which reduces revenues for tribal and state governments. For tribes, this revenue funds essential tribal government services, which directly benefits the lives of their tribal citizens.”
The CFTC will host a series of roundtables to discuss the future regulation of event contracts as pressure from gambling industry stakeholders starts to grow. The Commission received 21 submissions by letter.
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