U.S. SENATE News:

WASHINGTON, D.C. — U.S. Sen. Martin Heinrich (D-N.M.) led U.S. Sens. Tina Smith (D-Minn.), Maria Cantwell (D-Wash.), Richard Blumenthal (D-Conn.), Mark Kelly (D-Ariz.), Patty Murray (D-Wash.), Tammy Baldwin (D-Wis.), Alex Padilla (D-Calif.), Jacky Rosen (D-Nev.), Adam Schiff (D-Calif.), Brian Schatz (D-Hawaii), and Gary Peters (D-Mich.) in sending a letter urging the leadership of the U.S. Senate Committees on Banking, Housing, and Urban Affairs; and Agriculture, Nutrition, and Forestry to rein in prediction markets offering nationwide sports and event wagering, which abuse federal commodity and derivatives rules—infringing on state regulatory powers and violating Tribal gaming rights and sovereignty.

“We write with urgency regarding the continued lack of proper regulation over prediction markets and the resulting circumvention of state and Tribal gaming regulatory frameworks. The Digital Asset Market Clarity Act (CLARITY Act) and Digital Commodity Intermediaries Act (DCIA), as currently drafted, 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,” the senators wrote to U.S. Senate Committee on Banking, Housing, and Urban Affairs Chairman Tim Scott (R-S.C.) and Ranking Member Elizabeth Warren (D-Mass.); and U.S. Senate Committee on Agriculture, Nutrition, and Forestry Chairman John Boozman (R-Ark.) and Ranking Member Amy Klobuchar (D-Minn.).

The rapid expansion of sports event contracts through prediction markets and online casino-style gaming poses an existential threat to Tribal sovereignty by undermining the revenue that tribes rely on for government services such as healthcare, public safety, education, housing and social services.

The legal and jurisdictional framework governing all gambling operations, including sports wagers, on Tribal lands is established pursuant to the Indian Gaming Regulatory Act (IGRA) of 1988. Eventually, Tribes also entered the legalized sports betting market in 2018 following the Supreme Court’s decision in Murphy v. National Collegiate Athletic Association.

Currently, prediction markets claim to derive their operational authority from the Commodity Futures Trading Commission (CFTC), which has asserted its exclusive jurisdiction to oversee and regulate all prediction markets and continues to erroneously classify these products as financial swaps or derivatives rather than gambling.

“Any further Congressional grant of exclusive CFTC jurisdiction over digital asset markets without ample guardrails for prediction market contracts will reinforce the CFTC’s claimed exclusive authority over event contracts and permanently circumvent the hard-won regulatory and economic protections established under IGRA and states’ police powers,” the senators underscored.

The senators continued, “Moreover, as currently drafted, the DCIA contains explicit exemptions from CFTC regulatory jurisdiction, and the CLARITY Act contains parallel exemptions from federal securities oversight for platform developers and non-custodial DeFi infrastructure providers that would effectively allow prediction markets to offer online casino-style gaming and sports betting across the United States, entirely bypassing the localized Tribal-state regulatory systems required by IGRA.”

The senators concluded their letter by urging the leadership of both committees to amend both the CLARITY Act and the Digital Commodity Intermediaries Act to include:

• An IGRA and Tribal-state compacts savings clause; and
• Prohibitions on CFTC-registered entities from listing prediction contracts that resemble sports bets or casino-style gaming products.
• This includes an explicit statement that nothing shall preempt, repeal, or limit tribal authority under the IGRA, along with clear assurances that CFTC-regulated prediction or digital commodity markets cannot be used to circumvent existing tribal-state gaming compacts. 
• This also includes limits to any carve-outs for digital asset platforms by prohibiting online sports wagering or event-based prediction markets in jurisdictions where Tribes hold gaming rights.

The letter is supported by the Indian Gaming Association (IGA), National Congress of American Indians (NCAI), Santa Ana Pueblo, Sandia Pueblo, Ohkay Owingeh Pueblo, Laguna Pueblo, San Felipe Pueblo, Kewa Pueblo, Cochiti Pueblo, Acoma Pueblo, Jemez Pueblo, Santa Clara Pueblo, Taos Pueblo, Tesuque Pueblo, Zia Pueblo, Isleta Pueblo, Pojoaque Pueblo, and Mescalero Apache Tribe.

The full text of the letter is here.