Key Moments:
- Tribal gaming leaders in California are increasing pressure against prediction market platforms, citing threats to exclusivity and state tax revenues.
- Fanatics and other companies have launched sports-related trading products, raising concerns about bypassing state and tribal regulations.
- California Attorney General Rob Bonta is being urged to take an active role in legal action against prediction market operators.
Tribal Concerns Grow Over Prediction Markets
California’s tribal gaming authorities are intensifying their response to prediction market platforms. They warn that new products from Fanatics and other companies could weaken their exclusive gaming rights. They also argue that state tax revenue may fall if oversight is not enforced.
During a recent CNIGA meeting in San Diego, tribal leaders discussed two approaches. First, they plan to escalate both legal and political pressure. Second, they are privately considering launching their own platforms if current efforts fail. This dual strategy reflects the growing urgency within the tribal community.
Fanatics’ Entry Sparks Urgent Discussion
Fanatics began operating in several U.S. states in December. The company uses a brokerage model where users trade contracts on a market regulated by the Commodity Futures Trading Commission (CFTC). However, Fanatics does not hold a sports wagering license in California.
This approach has raised immediate concern among tribal leaders. They argue that these platforms offer sports wagering outside of established state and tribal systems. Moreover, Fanatics’ financial framework allows it to enter markets without complying with local gaming rules.
As CNIGA chair James Siva noted during an IGA webinar, “From a player’s perspective, this looks and feels like sports betting.” He added that companies market the products as bets to users but label them as “event contracts” in legal settings.
Legal Status and Regulatory Friction
Prediction market operators insist their products fall under federal commodities laws. They argue that the contracts trade like derivatives. For example, Kalshi and Crypto.com’s event exchange use CFTC protections to offer contracts tied to sports and other subjects.
However, concerns extend far beyond tribal groups. Several state regulators and commercial casinos also warn that sports-related contracts may bypass state licensing, tax rules, and responsible gambling protections. Regulators in Louisiana and Washington have even stated that these products could be considered unlicensed sports betting within their borders.
For California’s tribes, exclusivity remains a core issue. Their compacts on house-banked games and sports wagering protect investments and local jobs. According to Jason Giles, executive director of the IGA, prediction markets undermine this framework. He stated that allowing such activity “looks like a direct violation of the Indian Gaming Regulatory Act and state-tribal agreements.”
The first legal challenge, brought by three Northern California tribes, did not secure a preliminary injunction. However, tribal legal experts say the ruling left major questions unresolved. These include the interaction between federal CFTC oversight and state gambling laws. As a result, CNIGA and its partners plan to continue pushing forward.
California Attorney General’s Potential Involvement
Tribal leaders are now focused on convincing California Attorney General Rob Bonta to take a more active role. During the webinar, Siva said tribal members have been pressing for his direct involvement. They hope he will join amicus briefs in key cases and eventually file a state lawsuit against major prediction market companies.
Broader Impact and Next Steps
The debate in California is drawing nationwide attention. Tribal leaders from other states fear that prediction markets could threaten exclusivity, especially where online gambling is not allowed. Giles pointed to Utah and Texas as examples. In both states, residents can participate in sports outcome trading through federally regulated exchanges, despite bans on casinos and sportsbooks.
Investor interest in prediction markets is also growing. For example, Kalshi recently secured CFTC approval for election markets. Meanwhile, Polymarket attracted a new funding round led by Intercontinental Exchange. Fanatics’ business strategy also relies on expanding prediction market offerings for its large sports merchandise user base.
CNIGA policy consultant Rocha warned that shifting from regulated sportsbooks to prediction markets could harm both states and tribes. He stated that “states will lose revenue and tribes will see their bargaining position weakened, while upstart operators capture the upside.”
Legal Action and Coalition Building
California’s next steps focus on several areas. First, tribes intend to work closely with the attorney general’s office to challenge prediction markets in court. Second, they want federal lawmakers and regulators to examine CFTC policies. Third, they plan to strengthen alliances with other states and commercial gaming interests.
Siva summarized the stance during the San Diego meeting. He said tribal leaders remain determined to adapt and collaborate as prediction markets evolve. Their goal is to protect tribal sovereignty and preserve regulated sports betting systems.
| Platform | Regulatory Structure | Products Offered |
|---|---|---|
| Fanatics | CFTC-regulated contract market | Sports prediction markets |
| Kalshi | CFTC-regulated | Politics, economics, sports contracts |
| Crypto.com Event Exchange | CFTC-regulated | Event contracts including sports |
- Author
Daniel Williams
