Policy Analyst Amanda Fischer: Prediction Markets Violate State and Tribal Sovereignty
Better Markets policy director Amanda Fischer says Kalshi and other prediction market operators are violating state and tribal sovereignty as CFTC rulemaking and dozens of lawsuits play out.
A former top regulator with the Securities and Exchange Commission says prediction markets like Kalshi are trampling on legal ground that tribes and states have defended for decades. Amanda Fischer, chief operating officer and policy director at Better Markets and former chief of staff to ex-SEC Chairman Gary Gensler, called the prediction market industry’s rapid expansion into sports event contracts a direct violation of state and tribal sovereignty during the Indian Gaming Association’s New Normal webinar this week.
“We have long-standing state and tribal gambling laws that have been hard fought,” Fischer said. “And these folks just parachute in and think that by slapping some tech on a product, they can evade all the laws.” Her comments land in the middle of an escalating legal war between prediction market operators, the Commodity Futures Trading Commission, and a growing list of state regulators and tribal gaming authorities who argue sports-event contracts are simply sports betting wearing a different label.
A Regulatory Fight With More Than 20 Active Lawsuits
The dispute centers on the CFTC’s June notice of proposed rulemaking, which would amend Rule 40.11 — a 14-year-old rule barring exchanges from listing event contracts tied to gaming, terrorism, assassination, war, or activity considered unlawful or contrary to the public interest. Fischer argues the rule was never ambiguous. “Everybody understands what the rules of the game are,” she said, adding that the explosive growth of prediction markets began only after President Trump’s election and a shift in CFTC leadership under Chairman Michael Selig.
The agency has since sued nine states — including Arizona, Illinois, Kentucky, Utah, Connecticut, and New York — over their efforts to regulate or ban prediction markets, while more than 20 separate lawsuits are working through courts between state gaming regulators, tribal organizations, and prediction market operators. A federal judge ruled this month that Utah can enforce its anti-gambling statutes against Kalshi, while in New York the CFTC has invoked emergency authority to keep Kalshi operating even as the state pursues a $36 billion lawsuit against the company.
Nevada’s Ongoing Standoff Adds to the Pressure
Nevada has emerged as one of the most contentious battlegrounds. The state’s Gaming Control Board has accused Kalshi of continuing to accept sports, election, and entertainment contracts from Nevada bettors despite a court order and an agreed-upon geofencing deadline, and is seeking $120,000 per day in penalties for noncompliance. Fischer pointed to fights like Nevada’s as evidence that prediction market operators are “doing increasingly novel, strange gambits in court and through the rule-making apparatus” to protect their business model before the midterms and the end of Trump’s term, in case future regulators take a less favorable view.
She was equally critical of the CFTC’s approach to redefining “gaming” itself. “When we said gaming, we didn’t mean whatever everyone understands is gaming, which is sports betting, poker, casino games, all of that,” Fischer said, characterizing the agency’s rulemaking push as an attempt to narrow the definition to exclude sports contracts entirely — what she described as the CFTC trying to “do jazz hands at the court.”
Why the Indian Gaming Association Is Central to This Fight
Fischer credited the Indian Gaming Association and tribal advocates with slowing the prediction market industry’s momentum in Washington by explaining to lawmakers how sports-event contracts undercut tribal gaming compacts and state-regulated markets alike. Better Markets, she said, submitted formal comments on the CFTC’s proposed rulemaking — not expecting the agency to change course, but to build a public record that future courts and lawmakers can point to.
“It’s also important because it creates another avenue with which to litigate with the CFTC,” Fischer said, adding that the rule as proposed “is highly vulnerable to challenge from folks with standing to do so.” Both Fischer and IGA conference director Victor Rocha, who moderated the webinar, believe the fight over whether prediction markets can legally offer sports-event contracts will ultimately land before the U.S. Supreme Court.
A Political Problem the White House Can’t Easily Solve
Fischer noted a divide within the Republican caucus that complicates any quick resolution. While cryptocurrency regulation has drawn bipartisan support in Congress, she said prediction markets tied to sports betting are a different story, since many state-level Republican officials, law enforcement leaders, and tribal communities strongly oppose having sports betting pulled out of state and tribal jurisdiction and placed under federal commodities oversight. “It’s not as easy for the White House to embrace these prediction market folks as it is for the crypto folks, because their own constituents are divided on it in a way they are not divided on crypto,” she said.
With the CFTC’s rulemaking process still unresolved and dozens of lawsuits pending across multiple states, the legal status of sports-event contracts remains one of the most unsettled questions in gambling regulation. For bettors tracking where sports betting is legally available across the country, the outcome of these fights could reshape how — and where — sports-related contracts can be offered going forward.