Gambling Insider speaks with Steven Andrew Light, Visiting Professor of Indian Nations Gaming and Governance at the University of Nevada, Las Vegas, about Kalshi’s partnerships with tribal nations, the implications for tribal sovereignty and the potential consequences for the future of US gaming regulation.
Image: Courtesy of Steven Andrew Light
As Kalshi continues to establish partnerships with tribal nations, questions are emerging over what these agreements mean for tribal sovereignty, the Indian Gaming Regulatory Act (IGRA) and the future of sports betting regulation in the US.
The prediction market operator has previously defended its growing partnerships with Native American tribes to Gambling Insider, arguing that the arrangements create genuine economic opportunities rather than simply providing another way to distribute its products. Other tribes, at the same time, have challenged Kalshi‘s sports event contracts in court.
Gambling Insider spoke with Steven Andrew Light, Visiting Professor of Indian Nations Gaming and Governance at the William S. Boyd School of Law at the University of Nevada, Las Vegas, to examine the legal, economic and political implications of these developments.
Light, who co-founded the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota alongside Kathryn R.L. Rand, is a nationally recognised academic expert on tribal gaming and socioeconomic development. Together, they have authored more than 75 publications on tribal governance and gaming, including Indian Gaming Law: Cases and Materials and Indian Gaming Law and Policy.
Prediction Market Growth Leaves Regulators Struggling to Keep Pace
Gambling Insider: Kalshi argues that its partnerships demonstrate how federally regulated prediction markets and tribal economic development can coexist. Is this a meaningful exercise of tribal economic sovereignty, or could these arrangements ultimately weaken tribes’ collective ability to defend their gaming rights under IGRA?
Steven Light: “Tribal sovereignty means, by definition, that tribes get to make decisions about what is best for their governance and citizens under any circumstance.
“Tribes will be thinking about at least two dimensions of it: what’s best for their tribe in the short or long term, and what is sound strategy and policy for tribal economic development more generally, including collectively. That’s what the IGA does, for example, in that it is an umbrella advocacy or lobbying group for diverse tribal interests.”
However, Light believes the proliferation of prediction markets is creating challenges that existing regulatory frameworks have struggled to address.
“What’s tricky for tribes in this circumstance is that the economic success of prediction markets is leaving regulatory and policy approaches in the dust, not just under IGRA, but for states’ and tribes’ ability to regulate gambling within their borders, and also, writ large, undermining their investments in gaming law and public policy and sports wagering.”
Light also questions the wider public policy justification for the expansion of prediction markets into everyday activities.
“What are the public policy rationale and goals for prediction markets? Why do we need them as an everyday financial ‘trade’ or ‘hedge’ for consumers? What does enabling ‘trades’ or, put differently, ‘wagers,’ on nearly every activity mean for society?”
Kalshi Gains Leverage as Tribal Consensus Begins to Fracture
One of the central questions surrounding Kalshi’s tribal partnerships is whether individual tribes can pursue commercial arrangements with the exchange while other tribal nations continue to oppose its operations.
GI: Can one tribe legitimately partner with Kalshi to distribute sports event contracts nationally when another tribe objects to those same contracts being offered on its lands? Where does one tribe’s right to pursue economic development end and another tribe’s regulatory sovereignty begin?
Light: “Yes. As things stand, that’s what we’re beginning to see, so long as it comports with CFTC’s jurisdiction and other relevant law. That meets the definition of ‘tribal sovereignty.’ It is the same phenomenon as we would see with sovereign state governments making their own decisions.”
Nevertheless, Light suggests the political implications of these agreements could be significant, particularly given the historically strong opposition to prediction markets among tribal gaming stakeholders.
“However, it represents a fracturing of near-exclusive tribal consensus that prediction markets are bad for tribal sovereignty and bad for the tribal casino business.
“When tribal governments begin to split off from that consensus, Kalshi achieves an important goal: being able to argue that not all tribes are opposed to prediction markets or its products.”
Tribal Casinos Face Threats Beyond Lost Sports Betting Revenue
Kalshi has pointed to record tribal gaming revenues as evidence that prediction markets are not necessarily damaging existing casino businesses. However, Light argues that aggregate revenue figures do not fully capture the potential impact on sports wagering or the wider economic contributions of tribal gaming.
GI: Kalshi has cited record tribal gaming revenues as evidence that prediction markets are not necessarily harming tribal casinos. Is that a credible argument? What evidence would be needed to establish whether prediction markets complement or cannibalise tribal gaming revenues?
Light: “There’s abundant early data showing that prediction markets are generating enormous revenue on a short, hockey stick (upward) trajectory, that as much as 80% or more of the trades are on sporting events, and that it is likely that this is dramatically cutting into existing sports wagering markets.”
For Light, the potential consequences extend beyond competition for betting revenue. Tribal casinos play an important role in supporting employment, public services and economic development within tribal communities.
“Moreover, tribal casinos are disproportionately about jobs, economic development, and providing for the common good of tribal communities.
“And many tribal casinos provide significant tribal revenue sharing directly to state and local governments — this can only come from tribal gaming. Prediction markets circumvent all of those benefits to tribal and state or local governments.”
