Tribal Gaming’s $44 Billion Stake Looms Over Congress’s Prediction Markets Hearing

A House Agriculture subcommittee grills witnesses on sports prediction markets Tuesday, and the most organized opponent in the room is not a casino chain. It is the Indian Gaming Association, representing tribes that logged $43.9 billion in combined gaming revenue in the government’s most recent count.

Kalshi and Polymarket have spent months piling up court wins against state gambling regulators. Tuesday’s hearing puts a different, largely untested legal argument in front of Congress instead: tribal sovereignty over gaming on tribal land.

A Subcommittee Most Americans Have Never Heard Of

The Subcommittee on Commodity Markets, Digital Assets, and Rural Development, a panel under the House Agriculture Committee, is holding the hearing. Rep. Dusty Johnson, a South Dakota Republican, chairs the panel. Rep. John Rose of Tennessee serves as vice chair, and Rep. Don Davis of North Carolina is the ranking Democrat.

The session is titled Examining Customer Protections and Market Integrity in Sports Event Prediction Markets, according to the committee’s own calendar listing. It is the panel’s first hearing built entirely around sports contracts, rather than folded into a broader CFTC budget or nomination fight.

Event contracts let a trader buy a “yes” or “no” position on a specific outcome, such as which team wins a game, and collect a payout if they guess right. Kalshi and Polymarket list them as financial derivatives regulated by the Commodity Futures Trading Commission (CFTC). State gambling regulators call them bets by another name.

Witnesses include legal experts and executives from the American Gaming Association and the Indian Gaming Association, alongside attorneys who argue the CFTC already holds every tool it needs. Legal analyst Daniel Wallach has flagged that the pro-industry witnesses plan to urge Congress not to pass new legislation at all, insisting the agency can regulate platforms like Polymarket under existing law.

Where the Real Money Sits

The Indian Gaming Regulatory Act, a 1988 federal law known as IGRA, lets tribes run casino-style gaming on their own land under compacts negotiated with individual states. In exchange for following strict licensing and revenue-sharing rules, tribes get something close to exclusivity inside their state’s borders.

In the most recent count from the Congressional Research Service, 243 tribes owned, operated or licensed 532 gaming establishments across 29 states, grossing a combined $43.9 billion in gaming revenue. That figure comes straight from a Library of Congress research summary on tribal gaming law.

Exclusivity is the whole business model. States gave up direct taxation and licensing power over tribal casinos. Tribes, in turn, promised revenue sharing and accepted that no one else would get the same regulatory deal.

Sports event contracts do not ask permission from any of it. Kalshi and Polymarket list them under a federal registration, not a state compact, and pay nothing into the revenue-sharing arrangements the compacts were built to protect.

Tribes Are Already Suing

The Indian Gaming Association is not just showing up to testify. Tribal governments took this fight to federal court months before Tuesday’s hearing was ever scheduled.

• Three California tribes, including Blue Lake Rancheria, sued Kalshi arguing its sports contracts amount to unlicensed betting on tribal land under IGRA. A judge has so far declined to grant an injunction, and the case remains active.
• Tribes in Wisconsin filed a separate suit naming both Kalshi and Robinhood as defendants over the same sports-contract offerings.
• Sixteen tribes and the Indian Gaming Association filed a joint amicus brief in Connecticut backing state regulators who ordered Kalshi, Robinhood and Crypto.com to stop offering unlicensed contracts.
• More than 60 federally recognized tribes have filed amicus briefs in federal cases nationwide since the Indian Gaming Association condemned the CFTC’s approach in February 2026.

“Indian Country is united because this is one of the greatest threats tribal government gaming has faced in a generation,” Indian Gaming Association Chairman David Bean has said.

The Scoreboard Splits State by State

Kalshi’s core legal argument, that its federal registration preempts state gambling law, has won about as often as it has lost.

New York was the most recent loss. Judge Analisa Torres, the same judge who has presided over Ripple’s long-running case with the Securities and Exchange Commission, denied Kalshi’s bid for a preliminary injunction on July 7. Her order left the state free to keep treating Kalshi’s contracts as unlicensed wagering while denying Kalshi’s bid to block New York’s enforcement outright.

Torres wrote that “New York gambling laws as applied to Kalshi’s sports-event contracts are not preempted by the CEA.” Kalshi filed a notice of appeal to the Second Circuit the same day.

Michigan went further still. Ingham County Circuit Judge Rosemarie Aquilina signed a 14-day restraining order on June 29, ordering Kalshi to geofence sports contracts and advertising out of the entire state. Minnesota escalated fastest of all: the CFTC sued the state hours after its felony ban was signed, arguing only federal regulators can touch the contracts. The agency has filed similar suits against Arizona, Connecticut, Illinois, Kentucky, New Mexico, Rhode Island and Wisconsin.

Judges Can’t Agree on What Kalshi Is Selling

The split shows up inside the written rulings, not just the final scorecard.

• Judge David J. Porter, Third Circuit majority – wrote that federal law occupies the field of trading on a designated contract market, giving the CFTC exclusive reach over Kalshi’s New Jersey contracts.
• Judge Jane Richards Roth, Third Circuit dissent – called the same contracts “virtually indistinguishable” from sports bets and said that because Kalshi is facilitating gambling, it can be subjected to state regulation.
• Judge Analisa Torres, Southern District of New York – found that New York’s interest in preventing gambling harm and preserving sports integrity outweighs Kalshi’s federal preemption claim.

Three federal judges, looking at close to identical contracts, reached three different conclusions about what those contracts actually are. Congress now has to decide which view should govern nationwide, or leave the circuit split to sort itself out in the Supreme Court.

Does Kalshi’s Winning Argument Work Against Tribes Too?

Not necessarily. Kalshi’s court wins rest on the Commodity Exchange Act preempting state gambling statutes. Tribal claims run through a separate law, the Indian Gaming Regulatory Act, written to protect gaming rights specifically on tribal land, a jurisdictional hook the CEA-preemption argument was never built to answer.

Every ruling so far, in New Jersey, Nevada, New York and Michigan, has turned on whether the Commodity Exchange Act preempts state gambling statutes. Tribes are not arguing state law at all. They are arguing IGRA sits outside that fight entirely, protecting gaming activity on tribal land regardless of how any state’s own gambling code is written.

Bean has made the point in blunt terms, saying Kalshi lets betting reach tribal land without the compact, licensing or revenue share every other operator negotiated for years to secure. “Tribal sovereignty is trampled on, and state sovereignty is trampled on. That’s the big issue,” he said. He has also pointed to the platform itself: “Pull up your Kalshi app for one second, and you’ll see the same bets that are offered in every other legal sportsbook.”

No court has yet ruled on the IGRA argument on its merits. The California case remains open. The Wisconsin case is younger still. If a court eventually finds IGRA reaches sports contracts on tribal land no matter how the CEA treats state gambling law, Kalshi’s winning streak elsewhere would not settle that case.

Congress Has Three Bills and No Consensus

Congress is not short on bills aimed at prediction markets this session. It is short on agreement about which one, if any, should pass.

A separate crypto market structure push, the CLARITY Act, has seen its passage odds climb to 57% as Treasury Secretary Scott Bessent presses lawmakers to act. A third bill, the PREDICT Act, would bar federal officials from personally trading on prediction markets, a response to scrutiny over the Trump family’s advisory ties to both Kalshi and Polymarket.

The gaming associations want something narrower than all three bills combined: an outright ban on sports contracts specifically, not a broader market-structure fix.

Pro-industry witnesses argue Congress does not need to legislate at all. Wallach has noted that these witnesses plan to tell lawmakers to leave the question to the CFTC, which they say already holds every tool it needs. Robert Schwartz, one of Tuesday’s witnesses, said the agency can already block problematic listings outright. “It has powerful authority to disallow exchanges from listing problematic contracts,” he said, pointing to Dodd-Frank Act provisions that let the CFTC prohibit a contract from listing if it involves gaming and violates the public interest.

CFTC Chairman Michael Selig has described sports-related contracts as swaps governed by the Commodity Exchange Act, not wagers subject to state or tribal gaming law, and has said the contracts could play a role in price discovery. The subcommittee is not expected to vote on any bill Tuesday. It is simply the first time Congress has dedicated a full hearing to the sports-contracts question alone, with a tribal gaming leader holding one of the microphones.

Frequently Asked Questions

Does Tuesday’s Hearing Change Any Law Immediately?

No. A subcommittee hearing gathers sworn testimony but does not pass legislation or issue a ruling on its own. Any ban on sports event contracts would still need a bill to clear both the House and Senate and be signed into law, and no such bill has yet reached a floor vote.

How Are States Actually Blocking Kalshi and Polymarket Today?

Most enforcement relies on geolocation technology. Courts in Michigan and elsewhere have ordered the platforms to detect a user’s location and block sports contracts and related advertising inside specific state lines, rather than shutting the platforms down nationwide.

Would the CLARITY Act Settle the Sports Contracts Fight?

Not entirely. The CLARITY Act is built around broader digital asset market structure questions, dividing oversight between the SEC and CFTC, and does not specifically resolve whether sports event contracts count as gambling under state or tribal law.

Why Are Tribes Suing Under a Different Law Than the States?

States rely on their own gambling statutes and argue the Commodity Exchange Act does not preempt them. Tribes instead invoke the Indian Gaming Regulatory Act, a 1988 law protecting gaming rights specifically on tribal land, a claim no federal court has yet decided on its merits.