California’s tribal gaming leaders are sounding the alarm over prediction market sports contracts, claiming they violate Native American betting compacts. This development has been dubbed the ‘California Kalshi Crisis’ after a leading prediction market player.
Key Takeaways:
- Prediction markets in California may violate tribal gaming compacts
- CFTC’s approval of these markets raises concerns about jurisdiction
- Tribal leaders are organizing a national response to the issue
Tribal Gaming Leaders Voice Concerns
James Siva, Chair of the California Nations Indian Gaming Association (CNIGA) and Vice Chair of the Morongo Band of Mission Indians, has expressed deep concern over the emergence of prediction market platforms like Kalshi in California. These platforms, according to Siva, are essentially offering sports betting under the guise of ‘prediction markets.’
The Commodity Futures Trading Commission (CFTC) has approved these markets, a move that tribal leaders argue undermines existing laws and regulations. Siva stated, ‘The take by Tribal attorneys in [a recent] IGA webinar that this is an ‘existential threat’ is fairly accurate.’
Regulatory Concerns and Political Connections
CNIGA views the CFTC’s actions as overstepping its jurisdiction by approving what are essentially sports betting markets while misclassifying them as ‘event contracts.’ This mischaracterization, according to Siva, undermines the Wire Act, the Indian Gaming Regulatory Act (IGRA), and even the CFTC’s own rules.
The involvement of Donald Trump Jr. on Kalshi’s board has also raised eyebrows. Siva noted, ‘Donald Trump Jr. is on Kalshi’s board. I think that connection is too close to ignore.’
Tribal Response and Future Implications
Facing this challenge, tribal leaders are organizing a national response. Siva emphasized, ‘We’re working with the National Indian Gaming Commission, the Indian Gaming Association, and even some commercial partners, to coordinate our position.’
The issue extends beyond immediate concerns, potentially impacting the future of iGaming and the Indian Gaming Regulatory Act itself. Siva acknowledged that IGRA, which has long served as a foundation for tribal gaming, may need to evolve: ‘IGRA wasn’t written with digital platforms in mind.’
California’s Sports Betting Landscape
While prediction markets pose a new challenge, the broader issue of sports betting in California remains unresolved. Siva cautioned against rushing into ballot initiatives, noting the risks of voter fatigue and potential damage to public sentiment towards tribes.
In response to criticism from commercial operators, Siva was unapologetic about tribal gaming’s position: ‘Yes. We are entitled. And unapologetically so. We built this industry from bingo halls to billion-dollar operations. We’ve changed lives. Our entitlement comes from generations of hard work and sacrifice.’
As the situation unfolds, it’s clear that the ‘California Kalshi Crisis’ represents a significant challenge to the established order in tribal gaming, with potential ramifications for the broader iGaming industry in the United States.
