The Commodity Futures Trading Commission (CFTC) has scheduled a conference call for May 29 with tribal betting leaders to discuss the state of sports prediction markets.
The CFTC previously cancelled a planned roundtable over the expansion of prediction markets into sports betting at the end of this month. That meeting had been planned to bring various stakeholders, including state regulators, tribal leaders, and sports leagues together, so the scheduled conference call represents a scaled-down version.
Sports prediction markets threatening tribal economies
The National Tribal Gaming Commissioners & Regulators contacted the CFTC over the spread of prediction markets or designated contract markets (DCM) in sports.
In the letter, the group raised concerns over the threat that the markets offered by companies such as Kalshi and Crypto.com represent. The group wrote, “Kalshi’s unregulated sports betting contracts have diverted substantial revenues from tribal economies, undermining investments in legal compliance and threatening tribal governments’ ability to serve their communities.”
Kalshi advertises its prediction markets as offering legal betting in all 50 states, impacting exclusivity deals that tribes have in certain states. The Seminole Tribe signed an exclusive deal to offer Florida sports betting through its sportsbook, Hard Rock Bet.
Several other states, including Maine, New Mexico, Minnesota, Washingston, and Wisconsin also give state tribes exclusive rights over sports betting.
Prediction markets growing but remain small
Kalshi’s sports markets now account for over 75% of its trading volume following expansion into NBA, NHL, NFL, and MLB match-winner markets. Overall, the event contracts still make up a small portion of the sports betting landscape, however. Prediction markets generated around $23 million in revenue last year.
There is concern, however, that if left unchecked, more and more bettors will move away from tribal sportsbooks towards prediction markets. Especially in populous states where the tribes hold exclusive deals, such as Florida, or states with no regulated online betting, such as California.
The California Nations Indian Gaming Association (CNIGA) wrote to the CFTC in February, “CNIGA strongly urges the CFTC to make it clear that Sports Contracts are prohibited from being listed or made available for clearing or trading.”
“Trading of Sports Contracts is gaming, violates state and federal law, and is contrary to public policy for various reasons. Importantly, 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.”
Sportsbooks and offshore control the market
Despite exclusive deals in some states for tribes, regulated commercial sportsbooks still take the lion’s share of online sports betting. FanDuel and DraftKings hold an estimated 75% of the market.
Unlicensed operators, however, generate more revenue than the tribes and commercial platforms put together. It was estimated that offshore sportsbooks generated $67 billion in revenue last year, compared to $13.7 billion from regulated platforms.
The scheduled call between tribal leaders and the CFTC could bring some clarity on the future of sports prediction markets, but it seems more likely that the CFTC is trying to gently defuse the situation. It is rumored that the roundtable scheduled for last month was cancelled due to fears of overwhelming negative comments by participants.
Public statements from Acting Chairman Pham as well as incoming Chairman Brian Quintenz, who is still awaiting a confirmation hearing, offer strong support and acceptance for prediction markets and sports-related event contracts. Quintenez was nominated for the CFTC leadership role by Trump and is a member of Kalshi’s board.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling.
