Mark Kelly Calls for Reining in Prediction Markets that Infringe on Tribal Gaming Rights

Senator Mark Kelly (D-AZ) joined in a recent letter to the Chairs of several Senate Committees calling for legislative action against prediction markets infringing on Tribal gaming rights.

The Context

The rise of prediction markets like Kalshi and online casino-style gaming is still new territory for Congress, but Sen. Kelly and others are making clear that prediction markets threaten to cut into Tribal sovereignty, as gambling has been a reliable means for Tribes to bring in revenue for the provision of government services.

Moreover, Sen. Kelly's letter notes that current attempts to regulate prediction markets, such as the Digital Asset Market Clarity Act (CLARITY Act) and Digital Commodity Intermediaries Act (DCIA), will need to be subject to extensive rewrites, for if they pass in their current form, they "will only serve to exacerbate these issues by further removing regulatory accountability for decentralized finance (DeFi) betting protocols that deploy unvetted prediction and wagering markets, directly infringing on instances of Tribal gaming exclusivity and state police powers."

As a result, the Arizona Senator called for amendments to the CLARITY and DCIA Acts that include Tribal-state compact savings clauses in compliance with the 1988 Indian Gaming Regulatory Act (IGRA) and prohibitions on CFTC-registered entities from listing prediction contracts that resemble sports bets or casino-style gaming products.

Arizona vs. Prediction Markets

Kelly is not the only Arizona official seeking to rein in prediction markets, as Representative Yassamin Ansari (D-AZ) introduced the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act to prohibit anyone who feasibly controls, and likely knows, the outcome of such an event from placing a bet on it on such platforms in March.

In July, Governor Katie Hobbs (D-AZ) signed an executive order similarly prohibiting public officials from using nonpublic government information to profit on prediction markets and gambling websites.

Arizona Attorney General Kris Mayes, meanwhile, filed criminal charges against Kalshi in March, accusing it of operating an illegal gambling operation since it hosts wagers on the outcomes of Arizona elections.

In April, however, the federal government stepped in on the side of Kalshi and Polymarket against Arizona by suing the state, along with Connecticut and Illinois.