Sports prediction markets undermine tribal sovereignty, exclusivity

• At a recent Congressional hearing, lawmakers discussed the offering of futures contracts on sports events by prediction markets
• Rep. Gabe Vasquez revealed that while prediction markets, sports contracts and sports betting are regulated differently, they offer a similar type of entertainment and the outcome of the two is the same
• According to the representative, futures contracts on sports outcomes by prediction markets results in losses for tribes offering sports betting

While sports betting remains a popular activity across the United States, prediction markets have taken the country by storm.

Through futures contracts, prediction markets offer trading, instead of wagering.

However, besides culture, politics, music and even war, trading platforms offer futures contracts on sports events.

The impact of sports events contracts on tribal compacts was one topic discussed at a recent Congressional hearing.

Futures contracts on sports events result in losses for tribal gaming operators

At the hearing last week, the U.S. Commodity Futures Trading Commission’s (CFTC) Chairman, Michael Selig, showed support for prediction markets offering futures contracts on sports outcomes.

However, representatives of Federally Recognized Native American Tribes as well as lawmakers disagreed with this federal oversight offered for prediction markets, warning that such move undermines gaming compacts and exclusivity of tribal operators.

Notably, Rep. Gabe Vasquez, a representative from New Mexico in Congress, outlined that prediction markets offering contracts on the outcome of sports events impact tribal exclusivity and sovereignty.

During the hearing, Rep. Vasquez was accompanied by a representative who held a sign that showed betting lines from a prediction market and a regulated sportsbook.

As it was evident by the sign, the betting lines from the prediction market on a sports event and the state-licensed sportsbook didn’t differ much, however, he said that the two activities are regulated "completely differently."

"And although the odds are functionally the same, the outcome for the end user is the same, consumers couldn’t care less if they are using an official sportsbook or engaging with a prediction market," Rep. Vasquez added.

He said that tribal operators, permitted to offer legal sports betting in his district, have gone through decades of negotiations.

Rep. Vasquez further explained that such gaming compacts helped establish regulations about age verification, integrity, licensing and consumer protections.

"So when a federal agency like the CFTC allows prediction markets to bypass these established long-standing legal requirements, but under a different label, and uses loopholes to evade regulation and consumer protection standards, they undermine tribal sovereignty and state protections," he warned.

The lawmaker further said that the negative impact on tribal operators is financial losses.

The issues described by Rep. Vasquez echo a growing concern about prediction markets.

Lawmakers, responsible gambling advocates and experts have continuously warned that sports events contracts effectively enable 18-year-olds to participate in sports wagering.

This is in the context of the legal age required for sports betting, which is usually 21.

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