In the evolving landscape of gambling and financial speculation, prediction markets have emerged as a disruptive force to existing gaming interests, particularly in the realm of sports wagering. These platforms, which allow users to speculate on the outcomes of various events, including sports, are increasingly viewed as a direct competitor to traditional sports betting operations. For Native American tribes, who rely heavily on casino revenues, this development represents a profound threat. Drawing from recent financial disclosures by the Mohegan Tribal Gaming Authority in Connecticut, you can see the potential perils of ever-growing prediction markets, their impact on tribal revenues, and the concerted efforts by tribes in Connecticut and beyond to push for state-level bans.
The Mohegan tribe’s recent quarterly report underscores the vulnerability of tribal gaming operations at its hotel-casino resort properties. Amid tepid financial results, with Mohegan’s domestic resort revenue declining by 3.9% to $300 million, executives highlighted the encroaching danger of unlicensed prediction markets. The Mohegan tribe is accusing Kalshi, Robinhood, and Crypto.com of offering wagers on sports outcomes without adhering to state regulations or tribal compacts, thereby siphoning potential revenues from established tribal casinos. They claim this not only undermines the economic stability of tribes but also challenges the exclusivity granted under the Indian Gaming Regulatory Act (IGRA).
How Prediction Markets May Undermine Traditional Sports Betting
Prediction markets operate by allowing participants to buy and sell contracts based on the likelihood of specific outcomes, such as the winner of a sports game or the total points scored. While proponents argue these are financial instruments regulated by the Commodity Futures Trading Commission (CFTC), critics, including tribal leaders, contend they are essentially unlicensed sports betting. This distinction is crucial because traditional sports wagering in many states is either prohibited or exclusively licensed to tribes through compacts that ensure revenue sharing with states. A recent proposition in California to legalize sports betting (i.e., FanDuel, DraftKings) failed to pass when tribal gaming interests rallied against it, as it declined to provide for revenue shares for California’s Native American tribes.
The potential perils of the markets are multifaceted. First, they bypass geofencing and age restrictions that protect consumers in regulated environments. Unlike tribal casinos, which implement strict measures to prevent underage gambling and promote responsible gaming, prediction markets often lack robust safeguards, potentially exacerbating problem gambling rates. In Connecticut, for instance, the Mohegan tribe supports state efforts to enforce these protections, including proposed legislation like House Bill 5038, which aims to prohibit prediction markets from targeting those under 21 and mandates studies on their impact on state revenues and gambling addiction.
Economically, the threat is even more acute. Tribal casinos generate billions in revenue annually, funding healthcare, education, housing, and infrastructure for Native communities. The National Indian Gaming Association reports that tribal gaming contributes over $44 billion to the U.S. economy, supporting hundreds of thousands of jobs. Prediction markets, by offering similar wagering opportunities without contributing to these funds, divert money away from these vital sources. According to the Washington Indian Gaming Association, in states like Washington, unchecked prediction markets could undermine 52,000 jobs and $7.4 billion in economic impact. Do note that this is a partisan interest creating this estimate.
Moreover, they argue that prediction platforms erode tribal sovereignty. The IGRA was designed to empower tribes by granting them control over gaming on their lands, fostering self-sufficiency. Prediction markets, operating under federal commodities law, ignore this framework, allowing bets from anywhere, including tribal lands, without compact negotiations or revenue sharing. The tribes insist that circumvention not only violates exclusivity clauses but also sets a dangerous precedent for future innovations that could further marginalize tribal economies.
The overlap with sports wagering is particularly perilous. Sports betting has exploded since the 2018 Supreme Court decision in Murphy v. NCAA, with many states partnering with tribes to legalize it. Prediction markets, however, offer “event contracts” on sports outcomes, blurring the line between speculation and gambling. This has led to accusations that sports events on prediction platforms are “sports betting by another name,” evading state taxes and tribal revenues. In California, where tribes have historically dominated gaming, prediction markets threaten to fracture this exclusivity, potentially costing the state and tribes millions in lost revenue.
The Connecticut Case: Mohegan and Mashantucket Pequot Tribes Lead the Charge
Connecticut provides a stark example of how prediction markets are clashing with tribal interests. The Mohegan and Mashantucket Pequot tribes hold exclusive rights to gaming in the state, including sports wagering, under compacts that generate significant revenue for both the tribes and the state. In their latest earnings call, Mohegan executives warned that prediction markets pose a direct threat to this exclusivity.
This collaboration has manifested in concrete actions. In December 2025, Connecticut’s Department of Consumer Protection issued cease-and-desist letters to prediction market operators, demanding they halt operations in the state. The state Attorney General has filed lawsuits against Kalshi, alleging violations of gaming laws. The tribes have filed amicus briefs in support, arguing that these platforms siphon revenues and undermine sovereign funding. Governor Ned Lamont’s proposed bill further bolsters this effort by imposing penalties and requiring impact studies.
The financial stakes are high. Mohegan’s Q1 results showed a net income boosted by a one-time gain, but underlying revenues were flat or declining, attributed partly to competition from unregulated markets. Digital gaming grew, online sports betting is regulated and legal in Connecticut, but physical casino operations suffered from macroeconomic pressures and fewer events. Prediction markets exacerbate this by offering convenient, app-based wagering that competes directly with tribal sportsbooks like those at Mohegan Sun and Foxwoods Resort Casino. Unlike FanDuel, DraftKings, etc, the prediction markets operate outside the state’s licensing and regulation and taxation.
Beyond finances, the tribes view the unfettered operations of platform predictions as an assault on their sovereignty. The Mashantucket Pequot, operators of Foxwoods, have joined Mohegan in opposing any legislation that might legitimize prediction markets, such as age restrictions, arguing it implies acceptance of an illegal activity. This unified front reflects a broader strategy: using legal and political pressure to outlaw these markets entirely. In many states where tribal gaming operates, they have substantial political influence with state legislators and governors.
National Landscape: Tribal Opposition Across the United States
The threat is not confined to Connecticut. Across the U.S., Native American tribes are mobilizing against prediction markets. In California, three tribes—Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria—filed a federal lawsuit against Kalshi and Robinhood, alleging illegal sports betting on tribal lands in violation of IGRA and state compacts. The suit seeks injunctions to halt operations, highlighting how these platforms divert revenues and expose communities to unregulated gambling.
California’s gaming tribes, through the California Nations Indian Gaming Association (CNIGA), have been vocal. Chairman James Siva has led efforts to “choke the oxygen” out of these operators, viewing them as a warmup to larger battles. The state’s political landscape, where tribes hold significant influence after defeating sports betting propositions in 2022, positions them to push for bans. Prediction markets could undermine billions in tribal investments and revenue sharing with the state.
In Wisconsin, the Ho-Chunk Nation has sued Kalshi, arguing similar violations. The tribe contends that event contracts constitute Class III gaming, subject to tribal regulation. This case underscores the national scope: over 20 lawsuits involve states and tribes challenging prediction markets’ legality.
Washington state’s tribes, via the Washington Indian Gaming Association, warn that prediction markets threaten sovereignty and economic stability. They estimate potential losses in jobs and economic contributions if unregulated betting proliferates. Similar sentiments echo in Nevada, Arizona, and other states with strong tribal gaming sectors.
The Indian Gaming Association (IGA) is spearheading a congressional push to regulate or prohibit these markets, describing them as illegal gambling that bypasses IGRA. At briefings before the Senate Committee on Indian Affairs, tribal leaders have united with state associations to oppose this “illegal betting scheme.”
Economic Impacts: Revenue Losses and Broader Implications
Tribal gaming revenues fund essential services, with losses from prediction markets estimated at hundreds of millions since 2020. In Connecticut alone, sports betting generates $100 million annually for the state, much tied to tribal operations. Nationwide, the shift to prediction markets could fracture this, with projections of $10 billion in annual revenues for these platforms by 2030.
Beyond direct losses, there’s the risk to consumer trust. Regulated tribal casinos offer protections absent in prediction markets, potentially leading to increased gambling harm. States like Massachusetts and New York have banned or sued over these issues, recognizing the revenue diversion.
Legal Battles and Legislative Responses
Legal fronts are active. Federal courts are deciding if CFTC regulation preempts state and tribal laws. Early rulings, like those in California denying injunctions, favor prediction markets, but appeals loom. Tribes argue IGRA’s supremacy over third-party platforms.
Legislatively, senators urge CFTC restraint, while states like Connecticut propose bans. The Supreme Court may ultimately resolve this jurisdictional clash.
Conclusion: This Fight is Just Beginning
Prediction markets represent innovation, but at what cost? For tribal casinos, the perils are clear: revenue erosion, sovereignty threats, and unregulated risks. Tribes in Connecticut and nationwide are pushing back through lawsuits, advocacy, and alliances, safeguarding their economic futures. As this battle unfolds, balancing progress with protection remains key. We are only at the beginning.
