Kelly, Colleagues Urge Senate Committees to Regulate Prediction Markets, Protect Tribal Sovereignty & States’ Rights

Senator Mark Kelly (D-AZ) joined Senator Martin Heinrich (D-NM) and 10 of their Senate colleagues in 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-SC) and Ranking Member Elizabeth Warren (D-MA) and U.S. Senate Committee on Agriculture, Nutrition, and Forestry Chairman John Boozman (R-AR) and Ranking Member Amy Klobuchar (D-MN). The rapid expansion of sports event contracts through prediction markets and online casino-style gaming threatens Tribal sovereignty, 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 gaming operations on Tribal lands is established pursuant to the Indian Gaming Regulatory Act (IGRA) of 1988. Tribes also entered the legalized sports betting market in 2018 following the Supreme Court’s decision in Murphy v. National Collegiate Athletic Association. “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 wrote. 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 to ensure the authorities under those frameworks continue to govern gaming and sports betting on Tribal land. Prohibitions on CFTC-registered entities from listing prediction contracts that resemble sports bets or casino-style gaming products. Read the full text of the letter here .