A prediction market can sound like a financial tool built for people trying to forecast the future. Users buy contracts tied to an outcome: Will the Federal Reserve cut interest rates? How hot will it get in New York? Will a particular team win a championship?

But put a point spread, a money line or a player proposition on the screen, tribal gaming leaders told senators this week, and the distinction between a “prediction” and a bet becomes much harder to see.

On Tuesday (August 4), the Senate Indian Affairs Committee roundtable examined the proliferation of sports-related prediction markets and their effect on tribal gaming. Tribal leaders, gaming regulators, a state official and a public-health advocate argued that sports contracts offered through prediction markets are effectively sports betting — but without many of the state and tribal rules that ordinarily govern gambling.

The debate raises questions about who gets to regulate gambling, what happens to the tribal-state gaming system Congress established decades ago, and what protections consumers receive when something that looks like a bet is legally treated as a financial instrument.

And, for tribal governments, the stakes are especially high.

Prediction markets aren’t a novelty anymore

Sen. Lisa Murkowski, chair of the Senate Indian Affairs Committee, acknowledged that she initially viewed prediction markets as something of a novelty.

But this appeared to change as the industry grew. Murkowski said millions of Americans are now using prediction markets, with one leading platform reporting more than five million monthly active users. The range of contracts has expanded dramatically, covering everything from Federal Reserve decisions to the weather.

When you wager something of value on the outcome of a sporting event, it’s sports wagering. Relabeling the wager as an event contract or a prediction market or a derivative does not change what it is. – Jamie Hummingbird, National Tribal Gaming Commissioners & Regulators Chairman

And now, it seems that sports contracts have created the biggest legal collision.

Many tribes and states contend that contracts based on sporting events amount to sports betting and therefore fall under existing gaming laws. Prediction-market platforms and the Commodity Futures Trading Commission, by contrast, have treated the products as federally regulated financial instruments under commodities law. Courts around the country are now considering where the legal boundary lies.

Sen. Brian Schatz put the issue in much simpler terms.

He quoted a federal judge considering prediction-market litigation: “It looks like gambling to me.”

For consumers, Schatz argued, the distinction can be difficult to see. Someone who wants to put money on the Philadelphia 76ers winning an NBA championship can use a conventional sportsbook or a prediction-market app.

“The consumer experience is exactly the same,” Schatz said.

This became a recurring theme throughout the roundtable: What matters more — the legal label attached to a transaction, or what the customer is actually doing?

Same wager, different rules

Jamie Hummingbird, chairman of the National Tribal Gaming Commissioners & Regulators, told the committee, “When you wager something of value on the outcome of a sporting event, it’s sports wagering,” calling the product an event contract, prediction market or derivative, he said, does not change its basic nature.

Indian gaming operates within a regulatory structure that took decades to build.

Tribal nations are stakeholders in tribal gaming. We are not shareholders. – Mark Macarro, National Congress of American Indians President

Congress enacted the Indian Gaming Regulatory Act, or IGRA, in 1988, establishing a framework involving tribal sovereignty, federal oversight and, for Class III gaming, agreements negotiated between tribes and states. Hummingbird described that framework as a federal Indian-law “success story,” supported by tribal gaming commissions that oversee licensing, audits, game integrity, responsible gaming, patron protections and other requirements.

Tehassi Hill, vice chairman of the Indian Gaming Association and chairman of the Oneida Nation, said tribes spend more than $450 million each year regulating gambling and employ more than 6,000 regulators. Tribal gaming operations also maintain age restrictions and support problem-gambling programs including treatment, education, self-exclusion and employee training, he said.

Hill argued that prediction markets are offering familiar sportsbook products — “money lines, totals, parlays, prop bets” — while operating outside that regulatory structure.

“They claim to be innovators, but they have invented nothing,” Hill said.

Casino revenue keeps tribal governments running

The argument from tribal leaders was that tribal gaming revenue plays a fundamentally different role from ordinary corporate profit.

Hill told senators that gaming revenue funds health care, education, housing for elders, public safety and infrastructure. Tribal gaming also supported more than 682,000 jobs in 2025, he said, many of them in rural communities.

Murkowski framed the concern in similar terms. Tribal gaming generated a record $46.2 billion in gross gaming revenue in fiscal 2025, she said, while the broader economic output of Indian gaming was estimated at approximately $110 billion, including jobs, wages and activity in supporting industries. A major disruption to that industry, she warned, could therefore reach far beyond casino floors.

Mark Macarro, president of the National Congress of American Indians and chairman of the Pechanga Band of Indians, put it this way: “Tribal nations are stakeholders in tribal gaming. We are not shareholders.”

Gaming revenue, he said, is the “financial backbone” of government services in many tribal communities. If revenue moves to prediction-market operators that do not have the same compact, licensing and revenue-sharing obligations, tribes argue that the consequences will show up in public budgets.

Schatz said some tribal councils are already confronting those choices.

He described tribal leaders considering potential cuts to “public safety, education, infrastructure” and warned that Congress could not easily replace substantial losses in tribal gaming revenue through federal appropriations.

Exactly how much revenue is being lost, however, remains unsettled.

Hill said the Indian Gaming Association is working to analyze national data, although much of the information needed is proprietary and would have to be supplied by individual tribes. He pointed to work underway among Wisconsin tribes and the state to analyze that market.

Macarro also cautioned against relying on aggregate tribal gaming growth to conclude that prediction markets are having little effect. Overall revenue can rise because new gaming facilities open, he said, even while existing properties lose business. A more meaningful comparison would examine the same facilities year over year.

Financial rules weren’t built to regulate gambling

Tribal governments are not alone in challenging the expansion.

Ohio Solicitor General Mathura Sridharan told senators that her state became involved in the issue in early 2025, when prediction-market platforms began offering sports bets through their trading platforms. Ohio has since participated in litigation and led a coalition of 44 states responding to proposed CFTC rulemaking.

She focused on the different purposes of financial and gambling regulation.

Derivatives markets, she said, traditionally help businesses hedge risks, discover prices and allocate capital. Sports betting presents a different set of concerns.

“A wager on whether the Ohio State covers the spread is not managing commercial risk or facilitating price discovery,” Sridharan said.

States therefore regulate gambling with questions that commodities law was not designed primarily to answer: are vulnerable people being protected? Are operators encouraging responsible gambling? Are sports being protected against corruption?

State laws can require gambling companies to obtain licenses, verify bettors’ ages, report suspicious activity, operate responsible-gaming programs and offer voluntary self-exclusion. Prediction markets, Sridharan argued, can bypass many of those protections.

What if bettors think they’re investors?

Then Harry Levant shifted the conversation away from statutes, agencies and jurisdiction.

Levant, director of gambling policy at the Public Health Advocacy Institute, introduced himself as a clinician who treats gambling addiction, as well as a recovering gambling addict.

He told senators that he made his last bet on April 20, 2014, and survived a suicide attempt that night. The following year, after a gambling addiction that he said devastated his career and hurt his clients and family, the longtime lawyer stood in a Philadelphia courtroom as a disbarred attorney and criminal defendant and pleaded guilty to 13 financial felonies.

His central message to Congress was: “Prevention of harm is the single best form of treatment.”

Levant stressed that he does not favor prohibiting sports gambling altogether. He supports regulated legalization. His concern is the way modern gambling products can be delivered constantly through smartphones, combining sports, technology and rapid-fire wagering in ways that can intensify risk.

Prediction markets add another complication. Some people may not realize they are gambling.

Levant said six clients in his recovery group had returned to gambling through prediction markets during the previous three months.

Why?

“Because they thought they were making investments,” he told senators.

Congress now has to draw the line

There was broad agreement among the roundtable participants that Congress should act, although there was less agreement about exactly which legislative vehicle should carry that response.

Hill urged lawmakers to advance legislation explicitly addressing prediction markets and to protect state and tribal gambling laws. Macarro called for enforcement of existing law and noted that four of the CFTC’s five commission seats were vacant. Hummingbird asked for a clear regulatory framework. Sridharan called for legislation making clear that financial derivatives law does not displace state and tribal gaming law.

Some senators discussed adding language to pending legislation to make clear that the Commodity Exchange Act does not preempt IGRA, tribal-state gaming compacts or tribal sovereignty. Others cautioned against attaching the prediction-market fight to legislation primarily focused on other subjects.

The conversation ultimately kept returning to a deceptively basic question.

When someone opens an app, chooses a team, puts money on an uncertain sporting outcome and gets paid if that prediction is right, what exactly are they doing?

Prediction-market operators may describe that transaction using the language of contracts and financial markets. Tribal gaming officials, state regulators and public-health advocates at the roundtable used another word.

A bet.

And their message to Congress was that the answer will determine far more than what these products are called. It will determine who regulates them, which consumer protections apply, whether states and tribes can enforce their own gaming laws, and whether a regulatory system built over decades can be bypassed by changing the terminology on a smartphone screen.

Hummingbird warned, the current fight may still be relatively small because prediction markets have only recently begun gaining momentum. But waiting, he argued, could make the problem much harder to contain.

“We have the ability now to administer that one ounce of prevention,” he said. “But it must be done, and it must be done pretty quickly.”

Featured image: C-SPAN

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