Native American tribes say prediction markets siphon tribal casino money
A group of Native American tribes has argued that prediction market operators like Kalshi are diverting money away from tribal casinos, according to a new court brief.
According to Decrypt, the brief was filed by the Indian Gaming Association and 16 federally recognized Native American tribes, in support of the Connecticut Department of Consumer Protection, which is trying to shut down prediction platforms in the state.
Kalshi sued the Connecticut regulator in December, claiming it was threatened with imminent civil and criminal penalties for offering its prediction market contracts.
Shortly before the lawsuit, Connecticut issued cease-and-desist orders to Kalshi and two other operators, Robinhood and Crypto.com, ordering them to stop offering sports event contracts.
Connecticut’s tribes are not named as defendants in Kalshi’s lawsuit, but their claims are similar to those made by the California tribes that sued Kalshi in July. The brief alleges that firms like Kalshi siphon gaming revenues by offering sports-linked event contracts without tribal consent.
The legal pushback comes as the prediction market sector continues to grow.
Kalshi reached a reported valuation of around US$11 billion last year after a US$1 billion funding round. In comparison, rival Polymarket has been valued at US$8 billion after an investment from New York Stock Exchange owner Intercontinental Exchange.
Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.
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The Backstory
Why tribes are escalating the fight
Native American tribes are sharpening their legal strategy against federally regulated prediction markets, arguing the fast-growing sector is pulling dollars from tribal casinos and bypassing state compacts. Their case rests on a simple premise: if a platform offers sports-linked event contracts without state approval or tribal consent, it erodes both regulated gaming revenue and tribal sovereignty. The latest court filings build on months of pressure from tribes and state officials who contend prediction markets operate in a gray zone that looks like sports wagering but claims protection under federal commodities rules.
The industry’s rapid scale-up has raised alarms. Private valuations for marquee platforms have soared as investors bet on mainstream adoption and financial-style trading of events. Tribal leaders see a different trajectory: a widening channel for gambling-like activity that avoids the regulatory and revenue-sharing frameworks underpinning tribal gaming. That clash sets the stage for the broader legal and policy battles now unfolding in state and federal arenas.
From cease-and-desist orders to courtrooms
Connecticut has become a focal point. In December, the state regulator warned several operators to halt sports event contracts, prompting litigation. The Department of Consumer Protection later detailed its action in a cease-and-desist notice that framed such offerings as unlicensed online gambling. Tribal groups followed with supporting briefs that mirror arguments already lodged in other jurisdictions, including California and the Midwest. Reporting by Decrypt has tracked the tribes’ position that prediction markets “siphon” funds from tribal casinos; its coverage outlines the brief filed by the Indian Gaming Association and 16 tribes backing Connecticut’s stance (Decrypt summary).
The legal push is not limited to New England. A coalition of tribes threw their weight behind the Ho-Chunk Nation in its effort to block event contracts on tribal land, intensifying scrutiny of two high-profile platforms. The filing spotlights sovereignty concerns and alleged unlawful sports wagering, positioning the dispute as an existential question for tribal economies. That campaign reflects the broader rift mapped in coverage of the Ho-Chunk support brief, where tribes argue the platforms are skirting the regulatory architecture that funds essential services on reservations.
Regulators and operators split on prediction markets
State regulators and sportsbook operators are not aligned on how to treat prediction markets. Some industry executives see an opportunity to repackage betting-like exposure under a different banner, potentially shifting tax burdens and compliance demands. Others warn the move could backfire if it alienates regulators, partners and lawmakers who greenlighted traditional sports betting under state control.
A recent panel convened by Truist Securities underscored the uncertainty. Participants suggested state agencies are not ready for a wholesale pivot into prediction products, and they highlighted risk to tax collections if wagers are reclassified. The discussion, summarized in reporting on the Truist panel, noted that an aggressive shift could trigger legislative responses, including broader legalization of igaming to backfill revenue. Panelists also flagged integrity risks and the unresolved policy status of daily fantasy contests, which have operated with varying state guidance since the Supreme Court paved the way for legal sports betting in 2018.
Sovereignty, compliance and the “gamblefication” warning
Industry groups are pressing Washington and state capitols to draw clearer lines around event contracts. At ICE 2026, leaders from the Indian Gaming Association and American Gaming Association warned that prediction products promote a financialized narrative at odds with responsible gaming standards that govern sports betting. They argued that advertising prediction markets as investment tools blurs categories and could undermine consumer protections.
The session, covered in reporting on the ICE panel, also spotlighted concerns about insider trading and crypto-fueled obfuscation on some platforms. Tribal leaders framed the issue as a matter of law and governance: if an activity looks and acts like gambling, it should sit inside the state-tribal regulatory framework that underwrites a US$49 billion tribal gaming economy. The AGA’s warning about the “gamblefication of everything” adds pressure on policymakers to decide whether event markets belong inside, or outside, those structures.
Maine’s parallel push to expand tribal igaming
While tribes contest prediction markets, some are moving to expand online gaming within state-sanctioned boundaries. Maine’s Wabanaki tribes are pursuing exclusive rights to online table games, building on their control of mobile sports wagering. The House backed the proposal in a vote described in coverage of the House action, positioning the bill, LD 1164, as a revenue engine for both tribes and the state. The measure would channel a share of receipts into addiction services, opioid treatment and veterans’ homes, among other programs, echoing the earmarks that often accompany gambling expansion.
The Senate later advanced the bill by a narrow margin, as outlined in reporting on the Senate vote. The proposal’s legislative history is available on LegiScan, while state data show sports wagering generated several hundred thousand dollars in monthly taxes this winter (Maine Gambling Control Unit revenue). Tribal leaders and supporters pitch igaming as a controlled alternative to unregulated or federally shielded event markets, with explicit tax rates and programmatic funding. Earlier local coverage captured tribal arguments for economic self-sufficiency and statewide benefits (Spectrum News overview).
Opponents, including existing commercial casinos and some regulators, warn of job losses and revenue cannibalization if online table games roll out. The Mills administration has expressed reservations. The debate is instructive: Maine’s path illustrates how states can channel online gaming growth through tribal compacts and explicit tax regimes, in contrast to the jurisdictional uncertainty surrounding prediction platforms.
What to watch next
The legal fight over prediction markets is moving on two fronts. In court, judges will weigh whether event contracts fall under federal commodities oversight or constitute gambling subject to state law and tribal compacts. In legislatures, states could respond by clarifying definitions, tightening enforcement or expanding regulated igaming to protect tax bases and partnerships.
Tribal governments are likely to keep pressing their dual-track strategy: contesting prediction products they view as unlicensed gambling while advancing sanctioned online gaming under state and tribal authority. Platforms, meanwhile, will try to maintain a federal compliance posture and a financial-markets narrative. The outcome will determine whether event trading sits inside the regulated gaming ecosystem that funds tribal services and state programs, or outside it, reshaping how Americans bet on — or invest in — real-world outcomes.
