Explainer: Prediction markets and the future of Indian gaming

On Aug. 4, 2026, the U.S. Senate Committee on Indian Affairs (SCIA) hosted a roundtable titled “Tracking Prediction Markets’ Exponential Growth: Tribal Implications and Beyond.” The roundtable followed significant discussion in Tribal communities regarding the future of prediction markets and their potential impact on Tribal gaming operations under the Indian Gaming Regulatory Act (IGRA).

For Tribal Nations, the prediction market conflict is about more than economic development. Many Tribal Nations that operate gaming facilities use a portion of the revenue generated to fund citizen services, such as health care and education. This explainer provides a brief overview of prediction markets, their intersection with Indian gaming and the response from Tribal Nations.

Background

Derivatives

The prediction market discussion centers on the concept of a derivative. A derivative is a type of financial contract whose value depends on a variable, such as the outcome of a future event. Derivatives include futures, options and swaps, which are different types of financial contracts. A prediction market is an online platform that allows parties to purchase derivatives, with payouts depending on the outcome of an event. In the context of Tribal gaming operations, prediction market operators offer derivatives, or event contracts, that depend on the outcome of sporting events.

Derivatives are regulated by the Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act. The law was originally enacted in 1936 but was amended in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The amendments granted the CFTC “exclusive jurisdiction” over swaps and adopted an expanded definition of swaps that includes “any agreement, contract, or transaction” that is “dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” Proponents argue that this broad definition allows the CFTC to regulate event contracts, including those involving sporting events. Prediction markets have grown considerably in recent years, with some sources estimating that they have more than 5 million active users in the U.S. each month.

Indian gaming

Tribal Nation-operated gaming is governed by the Indian Gaming Regulatory Act (IGRA). IGRA was enacted in 1988 following an extensive period of advocacy by Tribal Nations and the U.S. Supreme Court’s decision in California v. Cabazon Band of Mission Indians. The Supreme Court determined that the federal government’s interest in promoting economic development and Tribal self-determination prevented the state from regulating gaming activities on Tribal lands.

IGRA recognizes that Tribal Nations have the “exclusive right to regulate gaming activity on Indian lands.” It establishes requirements Tribal Nations must follow to conduct gaming activities, which are divided into three classes. Most relevant to the prediction market discussion is Class III gaming, which includes gaming activities not included in Class I or Class II. Activities such as casino-style games, slot machines and certain forms of wagering and betting fall outside the definitions of Class I and Class II gaming. If a Tribal Nation meets the statutory requirements to conduct Class III gaming, IGRA recognizes the Tribe’s authority to regulate those activities on Indian lands, subject to the act’s requirements.

Statutory conflict

At the core of the prediction market dispute is a potential conflict between two federal statutory schemes. Prediction market operators contend that the Commodity Exchange Act’s amended definition of swaps encompasses event contracts involving sporting events and that such contracts fall under the CFTC’s exclusive regulatory jurisdiction.

Tribal Nations, meanwhile, point to IGRA’s definition of Class III gaming, which encompasses gaming activities not included in Class I or Class II, including certain wagering and betting activities. Tribal Nations argue that derivatives tied to sporting events are functionally similar to sports betting and wagering. Accordingly, they contend that IGRA governs such activity on Indian lands and protects Tribal Nations’ authority to regulate gaming there.

Recent developments

The conflict has generated a series of lawsuits, including cases brought by Tribal Nations. Courts have differed in their treatment of the relationship between IGRA and the CFTC’s authority over prediction markets. The U.S. Court of Appeals for the 3rd Circuit sided with the CFTC and prediction market operators, while the U.S. Court of Appeals for the 9th Circuit heard oral arguments on the issue in April 2026. The 9th Circuit has not yet issued a final decision. Some observers suggest the dispute could eventually reach the U.S. Supreme Court.

On June 12, 2026, the CFTC published a proposed rule in the Federal Register addressing its authority over event contracts, including those related to sports. Tribal Nations and organizations, including the United South and Eastern Tribes (USET), have since expressed concern that the CFTC’s proposed rule could expand or reinforce its authority over event contracts, including transactions occurring on Tribal lands.

At the Aug. 4 roundtable, SCIA leadership called on the CFTC to engage in meaningful consultation with Tribal Nations before issuing a final rule. Witnesses echoed that position and asked Congress to enact legislation clarifying that event contracts constitute gaming activities under IGRA. The National Congress of American Indians (NCAI) has since sent a letter to CFTC leadership calling for formal consultation with Tribal Nations on the matter. A recording of the SCIA roundtable is available on the committee’s website.

Conclusion

The public comment period for the CFTC’s proposed rule closed July 27, 2026. Tribal Nations interested in reviewing submitted comments can access them through Regulations.gov.

The CFTC has not announced a formal Tribal consultation session. Tribal Nations interested in providing additional feedback to the CFTC may consider requesting formal consultation. NCAI has shared a template letter that Tribal Nations can use when drafting such requests.