Sen. Heinrich, New Mexico Tribes Push for Rules to Rein In Prediction Markets

U.S. Sen. Martin Heinrich (D-N.M.) and a coalition of New Mexico tribes and pueblos are pushing Republican committee chairmen in the Senate to add guardrails around prediction market platforms before two major crypto bills advance any further. Heinrich sent a letter on Friday warning that unregulated event-contract apps threaten tribal sovereignty and the gaming revenue that tribal governments rely on for basic services.

The letter, signed by Heinrich and 11 other Democratic senators, along with 16 New Mexico tribes and pueblos, the Indian Gaming Association, and the National Congress of American Indians, targets the CLARITY Act and the Digital Commodity Intermediaries Act. Both bills are being negotiated in the Senate Banking, Housing, and Urban Affairs Committee and the Senate Agriculture, Nutrition, and Forestry Committee as lawmakers try to build a federal framework for digital assets.

Why Tribes Say the Bills Threaten Their Sovereignty

According to the letter, both pieces of legislation as currently drafted would strip accountability from online platforms that let users bet on sports and other real-world events. Heinrich and his co-signers argue the “rapid expansion” of these apps, several of which have layered in casino-style gambling alongside sports wagering, “poses an existential threat to tribal sovereignty by undermining the revenue that tribes rely on for government services.”

The core complaint is jurisdictional. Prediction markets operate as federally regulated exchanges under the Commodity Futures Trading Commission, which lets them offer sports-outcome contracts nationwide without going through the state-by-state licensing and tribal-state compact process that governs traditional sports betting. In New Mexico specifically, legal sports betting is permitted only on tribal land, meaning CFTC-regulated platforms can effectively offer the same product statewide while bypassing the tribal exclusivity built into state law. The senators’ letter argues this bypasses federal tribal gaming laws entirely and undercuts states’ own authority to regulate gambling within their borders.

A Broader Industry Fight Over the CLARITY Act

Heinrich’s letter is the latest move in a monthslong campaign by tribal gaming interests to insert sports-betting carve-out language into the CLARITY Act, the crypto market-structure bill considered the most realistic vehicle for addressing prediction markets this Congress. The American Gaming Association, the Indian Gaming Association, and hospitality unions including UNITE HERE have separately pressed senators to clarify that sports wagering falls outside the CFTC’s jurisdiction and cannot be offered through platforms like Kalshi and Polymarket.

The letter urges senators to amend both bills to prohibit prediction market platforms from offering sports betting outright and to explicitly state that the legislation cannot be used to sidestep existing tribal-state gaming compacts. Without those changes, the senators warn, unregulated online gambling would undermine federal treaty obligations to tribal governments and erode a core pillar of tribal self-determination. A standalone bill addressing the same concern, the Prediction Markets Are Gambling Act introduced by Sens. Adam Schiff and John Curtis, has stalled, making the CLARITY Act negotiations the more active battleground for now.

What Comes Next

With both the CLARITY Act and the Digital Commodity Intermediaries Act still being negotiated in committee, it remains unclear whether Republican chairmen will adopt the requested sports-betting carve-out. The debate mirrors ongoing friction elsewhere in the country, as regulators and lawmakers weigh how far prediction markets can go in offering sports-outcome contracts without triggering the same oversight that applies to licensed sportsbooks and tribal casinos. For now, tribal gaming advocates are treating the current round of federal legislation as their clearest opportunity to draw that line before it hardens into law.