In a recent interview with CDC Gaming , former Puyallup Tribal Chairman and current acting chair of the Indian Gaming Association (IGA), David Bean, had a lot to say about Prediction Markets. Stepping in for the recently departed longtime chair of the IGA Ernie Stevens, Bean has his sights firmly set on this emerging–and questionably legal–competitor in the gambling industry.
“This is so new that a year ago at G2E, nobody was talking about them,” Bean told CDC Gaming. “It came upon us out of the blue. We talked about our collective approach between the Indian Gaming Association and the National Congress of American Indians at our mid-year conference, creating a task force, our strategy, and talking points. It’s first and foremost about protecting Indian gaming and following the law.
“We’re the heaviest regulated industry — tribal, state, and federal regulators. We understand, respect, and follow the law. But what happens when folks operate in a world where most laws and rules don’t apply to them? The promises the federal government has made to tribes with treaties have never been fully honored. Indian gaming has been the great economic equalizer, allowing us to fully take care of our communities, as we’ve done since the beginning of time. We don’t like to fight, but we will vigorously defend tribal sovereignty and Indian gaming and promote diversifying tribal economies.”
The fundamental threat at play here is one prediction market in particular, Kalshi. Kalshi offers users an opportunity to buy into person-to-person “contracts” based on the potential outcome of future events. For example, if you think the Seahawks are going to win on Sunday, you could buy a contract on Kalshi for $200, that would pay you $300 if the Seahawks won. Because the potential wager has been created as a contract between two private individuals (essentially a handshake bet via web app) and not as a bet with a sports book, the framework for legal regulation is not in place to regulate the transaction.
“As far as the product is concerned, we are not the house,” a rep for Kalshi told ESPN back in June. “We are simply an exchange. So we sit between people that are buying contracts on a yes and a no side. We don’t win by people losing. And we don’t lose by people winning. We simply sit in between that transaction.”
If that all seems like a lot of mumbo jumbo and double talk, then you’re waking up to the same position that casinos, gambling regulators, and other gaming enterprises find themselves battling to make clear.
Kalshi has won several notable court victories in recent months to fight off attempts to regulate the industry with the same levels of oversight and rule of law that the rest of the gambling industry faces. Recently, however, the state of Maryland won a major victory over the disruptive betting platform.
There, U.S. District Court Judge Adam B. Abelson denied the company’s motion to lift a cease and desist order from state regulators against the betting platform. In his ruling the judge made note of U.S. Supreme Court precedent, which has been clear “that regulating gambling is at the core of the state’s residual powers as a sovereign in our constitutional scheme.” Or put more simply, gambling is a dangerous and difficult enough enterprise to regulate, that the law should fall on the side of state governments when it comes to managing new forms of betting.
Clearly there are many legal battles left to fight over the future of predictive markets and the power the internet has developing disruptive business models. If Kalshi’s footprint in the American betting landscape expands it could very well become a major threat to traditional casino gambling and to the stability of Tribal economics.
