The prediction market boom is posing an existential threat to American Indian gaming

The boom in online sports betting and prediction markets is disrupting Tribal government gaming—and in the process, creating an existential threat to Tribal sovereignty and economies.

Gaming in Indian Country, including sports betting, is conducted by Tribal governments under the Indian Gaming Regulatory Act of 1988 (IGRA), one of the most comprehensive and complex regulatory schemes in the world. Since its passage, gaming has singularly changed the economic landscape for Tribes across the country. Having survived mass closures and layoffs during the COVID-19 pandemic, tribal gaming revenues hit a high of $43.9 billion in 2024. These revenues are the primary source of Tribal government support for essential community services.

Yet today, the rise of prediction markets such as Kalshi, Crypto.com, and Robinhood is jeopardizing that economic development model. These sites offer sports “event contracts,” which circumvent the IGRA’s federal regulatory scheme and disregard rules such as state and Tribal licensing, minimum age requirements, and consumer protections delineated in carefully negotiated compacts. If left unchecked, Tribal sovereignty and the vitality of Tribal economies may be undermined.

This piece provides an overview of the history of Tribal economic development and how casino gaming became central to the economic well-being of Tribes and Native peoples. It explains how prediction markets are disrupting this gaming industry and putting Tribal economic development at risk. Further, the report outlines the legal developments happening in federal courts and Congress, and closes with ideas for addressing these challenges and alternative models to  diversify Tribal economies beyond gaming.

Why gaming matters for Tribes: Tribal sovereignty and limits on Tribal tax revenue

Native American Tribes are sovereign nations whose inherent right to govern themselves predates the formation of the United States. Tribes have a unique political relationship with the U.S. federal government, whose trust responsibility to Tribes is rooted in treaties, statutes, and court decisions.¹ Yet the federal government has consistently and severely underfunded its trust and treaty obligations to provide for the welfare and well-being of Native people through services such as health care, education, housing, and public safety.² As a result, Tribal governments bear the burden of filling the gaps in services for their citizens—a responsibility they have honorably accepted under the mantle of Tribal self-determination and self-government.

State and local governments generally rely on property and sales taxes to fund their operations and provide essential services. Tribal governments, however, are limited in their ability to similarly generate tax revenue due to a variety of issues, including the unique tenure of Tribal lands, complex jurisdictional issues, and persistent poverty rates in Indian Country.³ Tribes have the right to live on and develop their lands, but in many cases, those lands are held in trust—officially owned by the federal government and not subject to taxation. Although Tribal lands are not taxed, Native people pay considerable taxes through state sales taxes and federal income taxes, which has prompted Tribal governments to not burden their citizens with additional taxes. Moreover, Tribes are limited in taxing transactions involving non-Natives on reservation lands.⁴

Tribal gaming has helped overcome these impediments to raising general tax revenue and fostering economic development, both across Tribes and regions. As discussed below, gaming and the revenue generated from related enterprises have become crucial sources of Tribal government funding, providing critical services and infrastructure while creating valuable jobs.⁵ Most importantly, Tribal gaming supports community health and well-being.⁶

Indian gaming markets and regulation

As sovereign nations, Tribes are authorized to conduct what’s known as “Class III” gaming—the most regulated and lucrative class of gaming—if three conditions are met: 1) the particular form of gaming is permitted in the state in which the Tribe is located; 2) the Tribe and state have negotiated a compact approved by the Secretary of the Interior; and 3) the Tribe’s gaming regulations are approved by the chair of the National Indian Gaming Commission. Class III gaming includes blackjack, craps, roulette, slots, and more recently, sports betting. Any gaming on Indian lands that is not authorized by a Tribal-state compact violates federal and state criminal laws. Today, Tribal governments have collectively scaled a $44 billion gaming industry (comprised of gaming revenues and related enterprises and amenities), becoming an important component of the U.S. economy.⁷

Indian gaming began in the 1970s and 1980s, with a few Tribes operating bingo halls as they explored opportunities to establish reliable sources of revenue to support their communities. For example, the Seminole Tribe’s bingo hall in Florida and the Mashantucket Pequot Tribe’s high-stake bingo operation in Connecticut showed the tremendous potential of gaming on Indian lands. In 1987, the Supreme Court affirmed the inherent right of Tribal governments to offer commercial gaming in the landmark decision California v. Cabazon Band of Mission Indians.⁸

Facing rapid growth and competition, states lobbied Congress for a role in regulating gaming on Indian lands. So, just one year after the Supreme Court decision, Congress passed the Indian Gaming Regulatory Act (IGRA), thereby creating one of the most comprehensive and complex regulatory schemes in the world; only Tribal government gaming is regulated to such an extent.

Before the IGRA, Tribes offered bingo games in community centers and makeshift buildings unfettered by state regulatory authorities. After the IGRA, Tribes built their own gaming markets, resorts, and entertainment amenities. Tribal casinos soon became as well-known destinations for gaming as Las Vegas venues, offering blackjack, craps, roulette, slots, and sports betting.

Today, new forms of internet-based gaming allow Tribes to offer gaming beyond the floors of their brick-and-mortar casinos. Following the 2018 Supreme Court decision allowing states to legalize sports betting, Tribes swiftly entered the market, along with their state counterparts.⁹ In some states, Tribal governments have the exclusive right to offer sports betting, while in others, they operate alongside commercial casinos.

The economic impact of Indian gaming

Today, American Indian Tribes are stronger socially and economically than they have been in the last 250 years. Through resolve and resilience, Tribes have wrestled with more than two centuries of disastrous federal policies that caused massive land loss, destruction of traditional lifeways, forced assimilation, family separations, and a legacy of persistent poverty.¹⁰ But since the new era of self-determination began, Tribes have achieved substantial gains in governance, economic development, and land control by taking over federal programs, establishing legal and judicial systems, and becoming economic anchors in their regions. They have increased their political activism, gained more control over their lands, and improved social and economic conditions through greater autonomy and the ability to tailor programs to their specific needs.¹¹

Gaming revenues have contributed to this advancement and allowed Tribes to become truly self-determined and self-governing institutions, providing much-needed investments in Tribal health, education, welfare programs, and reservation infrastructure such as roads, water and sewer systems, and internet access. These investments, in turn, have uplifted reservation communities and improved their quality of life.¹²

Economist and Brookings Nonresident Senior Fellow Randall Akee has closely examined this trend, showing “the dramatic change in economic conditions for the population of American Indians living on reservations over the first two decades of the Indian Gaming Regulatory Act—the 1990s and 2000s.”¹³ For example, since the 1990 census, the real income of Native people living on a reservation has grown by 63%, and the poverty rate for reservation families with children was down to 27% by 2018, compared to more than 47% in 1989.¹⁴ As incomes increase and employment stabilizes, reservation communities have seen other positive benefits: high school graduation rates have increased, the chances of committing a minor crime have been reduced, and the likelihood of voting in adulthood demonstrably increased¹⁵—all alongside overall improved health, well-being, and economic outcomes.¹⁶

Improved economic conditions on reservations have also demonstrated positive spillover effects for the people and communities beyond those reservations.¹⁷ Prior to the pandemic, Tribal governments and their enterprises made an annual economic contribution to the U.S. gross domestic product (GDP) in excess of $125 billion, accounting for more than 1.1 million jobs and $50 billion in worker income and benefits, 80% of which were for non-Indian employees.¹⁸ Tribal casino employees also spent robustly off-reservation, paying more than $25 billion in federal, state, and local taxes while increasing the revenues of local businesses with their spending.¹⁹ Post-pandemic, these figures are still growing along with increasing Tribal gaming revenues. Nevertheless, it is important to note that this general progress has been slow and uneven across Indian Country.

The intrusion of prediction markets on tribal government gaming

The rapid expansion of sports event contracts through prediction market platforms poses a particular threat to Tribal governments. Thus far, these platforms have been operating outside the well-crafted and well-honed Tribal-state regulatory scheme the IGRA established.

The primary players are Kalshi, Crypto.com, and Robinhood, whose prediction market platforms offer sports gaming products that operate much like sports betting. Kalshi, currently the largest prediction market platform, is pulling in significant revenue: more than $2.5 billion on sport event contracts in September 2025 alone, coinciding with the start of the NFL season. As a comparison, in September 2024, online sportsbooks accepted a combined $14 billion in bets.

Kalshi’s mobile app for buying sports event contracts is accessible at any time in every state and on Indian lands, and it operates outside of state and Tribal gaming laws.²⁰ Sports betting is legal in only 39 states plus Washington, D.C., while Tribal sports betting is authorized in just 10 states. A few tribes—such as the Seminole Tribe of Florida—have secured the exclusive right to offer sports betting in their state.

Kalshi has approval from the Commodity Futures Trading Commission (CFTC) to operate as a regulated designated contract market in the U.S., which includes sports-based event contracts. Several more prediction market companies intend to offer similar event contracts, which will enable anyone with a cell phone to place a bet anywhere in the United States, including Tribal and state markets where sports betting has not been legalized. 

Tribal challenges to prediction markets

Tribes have a compelling interest in defending their inherent and exclusive rights to conduct and regulate gaming on Indian lands.²¹ Likewise, states are seeking to protect their authority to regulate gaming activities under state laws and the U.S. Constitution. In both direct litigation and amicus briefs, Tribes and states are challenging the legality of Kalshi and other prediction markets’ activities, hoping to prohibit them from offering unregulated sports event contracts in their territories and states.²²

The central tenet of the Tribes’ argument is sovereignty: They argue that Kalshi and other prediction platforms are conducting illegal sports betting on Indian lands in violation of the Tribes’ right to govern their communities and in contravention of the IGRA. Specifically, the Tribes argue that Kalshi’s sports event contracts—effectuated by accessing mobile apps while on Indian lands—constitute Class III gaming, and are therefore subject to Tribal regulations under the IGRA, defined in an approved Tribal-state compact and overseen by the National Indian Gaming Commission.

In response, Kalshi contends that the CFTC’s authority under the Commodity Exchange Act (CEA) overrides the IGRA, and thus the IGRA and Tribal law do not apply to it. Kalshi also argues that its servers and personnel are located off-reservation, and that online access from a reservation does not constitute doing business on Indian lands.²³ If Kalshi’s arguments prevail, the IGRA’s comprehensive regulatory scheme would be upended, its protections of Tribal sovereignty extinguished, and Tribes’ gaming markets seriously impaired.

Potential pathways to resolution

So far, neither the courts nor Congress have halted Kalshi’s activities. Yet both will have to address the tensions between the IGRA and the CEA, more quickly so in the courts. And review by multiple courts in various jurisdictions may ultimately end up before the Supreme Court. 

Congress has a definite interest in addressing these issues too. In September 2025, Sen. Catherine Cortez Masto (D-Nev.) and six other senators sent a letter to the CFTC expressing concern that it was “implicitly permitting sports gaming products that are regulated by states and tribes, not the CFTC.”²⁴ The letter states that the CFTC is “expressly prohibited from allowing event contracts that involve gaming, are unlawful under federal or state law or are contrary to the public interest.” The senators caution the CFTC to “not override state and tribal law allowing sports betting in all 50 states by permitting some companies to categorize their sports betting activities as ‘event contracts.’”²⁵

The senators’ concerns may become a pivotal issue in the confirmation process of cryptocurrency regulator Mike Selig to head the CFTC. In his own post on X, Selig pledged “to work tirelessly to facilitate Well-Functioning Commodity Markets, promote Freedom, Competition and Innovation, and help the President make the United States the Crypto Capital of the World.” Whether the new CFTC chair will be responsive to the issues expressed in the senators’ letter remains to be seen. With President Donald Trump’s son being hired as Kalshi’s strategic advisor last year, Tribal gaming may soon be caught at the intersection of cryptocurrency and futures trading on sporting events.²⁶

Moving beyond gaming to transform Tribal economies

In February 2019—30 years after the enactment of the Indian Gaming Regulatory Act—the Brookings Institution assembled a group of Tribal officials, academics, government regulators, and industry officials to discuss the future of Indian gaming. At that time, the National Indian Gaming Commission was reporting gross gaming revenue of $33.7 billion for Fiscal Year 2018. Then the COVID-19 pandemic hit, and gross gaming revenue dropped to $27.8 billion for FY 2020. But Tribal gaming operations quickly recovered, with a reported all-time high of $43.9 billion in FY 2024.

While these numbers reflect concerted efforts by Tribal leaders to preserve and grow their gaming operations, forecasts from the 2019 Brookings conference about potential risks in the industry have also been realized. The primary concerns are interconnected: navigating Tribal gaming operations from brick-and-mortar venues to mobile gaming and online sports betting platforms while maintaining their distinction from the commercial gaming industry; realizing the imperative to diversify Tribal economies and awareness of labor force concentration in the casino industry; and engaging the next generation of Tribal members to sustain the social and economic benefits of investments in their communities.

The rapid expansion of online gaming and sports betting has indeed created new market threats. These include the erosion of Tribal exclusivity in the gaming market and the corresponding loss of market share—and now, the incursion of unregulated prediction markets and sports-based event contracts. For decades, Tribal casinos have had near-exclusive access to legal gaming in many states. However, the proliferation of state-sanctioned sports betting and online platforms has eroded this market advantage. For example, Tribes in Arizona lost access to the highly lucrative sports-betting market when the state guaranteed licenses to professional sports teams that partnered with national commercial casinos.

Looming over all of this is the existential threat to Tribal gaming from new forms of gaming, such as Kalshi’s sports event futures. While some Tribes have expanded into sports betting since 2018, their success—and the inclusion of more Tribes in the market—depend on resolving complex legal issues with state and commercial gaming companies and preserving Tribal sovereignty.

One Tribal leader already has called for “post-gaming economic development for Indian country.” Such an economy would involve leveraging gaming revenues to create a multi-sector economic base by adding stable, long-term financial growth opportunities and expanding Tribal employment sectors, which currently are highly concentrated in gaming- and government-related jobs.

Figure 1 illustrates that the availability of jobs on reservations is skewed to gaming-related jobs: On average, reservation jobs are highly concentrated in large government- and casino-related workplaces (gaming is coded as “Arts, Entertainment, Recreation” and Tribal government is coded as “Public Administration”).²⁷ However, it’s important to note that individual reservations vary, and a minority of successful gaming reservations sway the jobs averages.

These facts suggest that where gaming dominates reservation employment, business diversification becomes especially important for a variety of reasons, such as:

• Risk mitigation. Gaming is subject to changing laws, political priorities, and market innovations. Diversification spreads risk across more businesses and creates more resilience against potential economic downturns and policy shifts that impact gaming revenue.
• Economic sustainability. Many Tribes see gaming as a means to an end, not an end in itself. Diversification is a way to create a broader economic foundation that can support the community for generations.
• Broader economic benefit.The success of gaming in Indian Country is not universally shared; only a minority of Tribes profit significantly from it. Diversification is a crucial strategy for Tribes that do not have the resources to benefit from gaming.

Some Tribes are leading the way by expanding into a variety of industries, often through Tribe-owned business entities. Examples include:

• The business enterprises of the Winnebago Tribe of Nebraska—managed through Ho-Chunk, Inc., the Tribe’s economic development corporation—operates a diverse portfolio that includes government contracting using the Small Business Administration’s 8(a) program, real estate, hotels, convenience stores, and manufacturing. Ho-Chunk, Inc., also invests in agricultural operations, such as Ho-Chunk Farms, and supports community development initiatives such as Rez Cars and financial education through Ho-Chunk Community Capital.
• The Pokagon Band of Potawatomi in Michigan established Mno-Bmadsen as a wholly owned Tribal entity to diversify the Tribe into manufacturing, construction, real estate, and retail businesses. Its mission is to “diversify Pokagon business interests, revenue streams, and wealth for future generations” and advance economic self-sufficiency for the Pokagon Band.
• In 2015, the Mille Lacs Band of Ojibwe purchased several hotels in downtown Saint Paul, Minn., making them the largest hotel operator in the city at that time. These acquisitions were part of the Band’s long-term strategy to diversify their investments beyond casinos and create new revenue streams and jobs.
• The Blue Lake Rancheria and other Tribes in Northern California are investing in renewable energy to supply local power and secure energy resilience.
• Michigan’s 12 federally recognized tribes have diversified their economies to reduce reliance on gaming revenue, generating a combined $1.2 billion in economic impact from non-gaming businesses in 2024—a roughly 330% increase since 2019. According to the 2024 Michigan Non-Gaming Tribal Economic Impact Study—a collaborative report on the contributions of Tribal business entities—this impact comes from 78 Tribal enterprises operating across sectors such as construction, manufacturing, real estate, and technology.

While gaming will likely remain a significant component of Tribal business portfolios, it behooves Tribes to evaluate their heavy investments and reliance on gaming with an outlook toward a more balanced economic development future. Congress and states can facilitate scaling emerging economic models for Tribes by addressing issues such as access to capital, excessive regulatory burdens, and program accessibility through legislative changes and administrative reforms.

For example, the lack of access to the capital and credit needed to invest in reservation infrastructure and businesses is a significant and well-documented constraint on economic development in Native communities.²⁸ Key issues raised in this research include:

• Indian Country and rural America often lack access to traditional financial institutions, and Native American-owned and Native American-serving financial institutions generally do not have the capacity to fill the capital and lending needs of those communities.
• Traditional banks operating near Native communities may lack understanding of the local culture and complexities of providing financial services in Indian Country.
• Recent budget cuts to the Community Development Financial Institutions (CDFI) Fund severely impair the ability of Native CDFIs to provide consumers with critical alternatives for home and business loans that are hard to obtain from mainstream lenders.
• Tribes still do not have full authority to put their lands to productive use, mainly because of bureaucratic impediments to use these lands efficiently for collateral and security purposes.
• Tribal governments also face legal impediments to their taxation authority, forcing them to rely on federal programs and Tribal enterprises for needed revenue.²⁹

Congress can help meet the federal government’s trust and treaty obligations to Tribes by improving access to capital and addressing these constraints in several ways. One is to streamline processes for individual land leases and mortgages.³⁰ Another is to continue supporting the Federal Initiative on Access to Capital in Indian Country—a multi-agency effort launched in 2023 to provide more streamlined and less bureaucratic funding to Tribes for economic development purposes.³¹

The federal government also needs to increase support for Native CDFIs, as well as vital economic development resources in Indian Country that receive support through the Native Initiatives program to build capacity and increase lending in Native communities. Other proven, effective programs are the New Markets Tax Credit, Capital Magnet Fund, and the Department of Agriculture’s relending program for affordable housing, along with other programs such as the State Small Business Credit Initiative.³² While some of this funding and program support appear to be intact, the Trump administration has sought to reduce funding for several of these programs or eliminate them entirely, much to the consternation of Tribes.³³

Finally, states can also support these models by eliminating dual taxation, reducing jurisdictional hindrances, and collaborating with Tribes on development initiatives. Other steps include providing more collaborative funding opportunities for housing and business development and improving access to state programs.³⁴

Conclusion

Gaming holds immense importance to Native American communities. It provides a crucial source of self-generated revenue that fosters Tribal self-sufficiency and funds essential government services and programs. These investments have had substantial positive social and health benefits that help Native communities and Tribal members thrive, and reduce dependence on state and federal funding.

Tribal gaming is not merely about profit—it is a powerful expression of sovereignty, self-determination, and nation-building. As Tribes continue to grow and diversify their business portfolios, they are not only reshaping local and state economies, but are reclaiming their futures.

Yet Tribal sovereignty and the Indian gaming industry face a tangible threat from prediction market companies that are dramatically changing the rules of gaming and obscuring regulation. As these platforms push deeper into the market, Tribes need to understand what is at stake for them and their communities, and how to prepare for what comes next.