USA

Regulators Challenge Prediction Markets’ Claims of

October 16, 2026
Priya Patel

Tribal and state gaming regulators in the US are pushing back against prediction market companies that claim their sports-event contracts represent innovative financial products. These regulators warn that many of these markets operate without proper licensing and may expose players to legal and financial risks.

Prediction markets, which allow consumers to trade contracts on the outcomes of sports and other events, have gained popularity partly due to regulatory leniency during the Trump administration. Companies like Kalshi argue their contracts qualify as swaps under federal law, positioning themselves as innovators in the betting space. However, tribal gaming lobbyists, lawyers, and state regulators dispute these claims, emphasizing that such markets often function as unlicensed sportsbooks.

Jason Giles, executive director of the Indian Gaming Association, expressed skepticism about the touted innovation, stating, “They all get the Kalshi talking points: ‘This is innovation and we can’t be left behind.’ I don’t know what the innovation is.” Giles also cautioned tribes partnering with Kalshi that waiving tribal-sovereign immunity could expose them to future lawsuits, as these activities may be illegal under state laws.

In Nevada, Mike Dreitzer, chairman of the Nevada Gaming Control Board, emphasized the need for genuine innovation that includes player protections and licensing. He said, “Doing it in states in which it’s otherwise a penalty or should I say a violation of the penal code, that’s not innovation.” Dreitzer highlighted concerns about prediction markets allowing wagers from 18-year-olds, while most states require bettors to be at least 21 for sports betting. This discrepancy raises potential risks for younger players accessing these markets without adequate safeguards.

Regulators also noted that states have the right to determine their own gambling laws and licensing requirements. Nevada has made it clear that participation in unlicensed prediction markets could disqualify operators from entering its regulated gaming industry. This stance aims to protect players by ensuring markets operate under strict oversight.

Several tribes, including the Tunica-Biloxi Tribe in Louisiana and the Alabama-Quassarte Tribal Town in Oklahoma, have partnered with Kalshi to launch prediction market platforms. While these partnerships promise new digital revenue streams, regulators warn players to be cautious as the legal status of these markets remains uncertain and may lack the consumer protections found in licensed sportsbooks.

Players and bettors should be aware that engaging with unlicensed prediction markets could carry legal risks and may not offer the same safeguards against fraud, underage gambling, or problem gambling as regulated operators. It is important to check whether a platform is licensed in your state and to understand the terms and conditions before participating.

For more on how prediction markets are regulated and the implications for players, see the CDC Gaming report. Additional context on regulatory responses can be found in Nevada regulator’s comments and The Guardian’s analysis.

Players interested in sports betting should also review protections and licensing requirements under sports betting regulations and consider responsible gambling resources available through player protection initiatives.

Priya Patel
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