ATMORE, Ala. — The Poarch Band of Creek Indians and other tribes have called on the Commodity Futures Trading Commission to immediately crack down on prediction markets, following a closed-door meeting with agency officials this week.
The tribal leaders said the CFTC has failed to uphold its regulations and exercise its authority to stop sports-event contracts that circumvent longstanding federal, state and tribal gaming laws.
What Prediction Markets Are
Prediction markets such as Kalshi and Polymarket allow customers to buy and sell contracts on sports events, functioning similarly to more traditional sports betting platforms.
Although prediction market companies have been sued in courts across the country, the federal government has maintained that they are akin to financial products, not subject to state gambling laws, and legal in all 50 states.
The distinction is technical and consequential. A sports bet is a wager regulated under state gaming law. An event contract is a derivative — a financial instrument whose value depends on whether a stated outcome occurs — regulated federally by the CFTC. If a contract on the outcome of a football game qualifies as the latter, state gambling law does not reach it.
Prediction market apps are available to download in Alabama despite the state’s strict anti-gambling laws.
As a result, companies continue to offer what are functionally sports bets outside the regulatory framework that governs every other legal gaming operator, the tribes said in a recent statement.
The Sovereignty Argument
“The Poarch Band of Creek Indians and the State of Alabama prohibit online gambling and underage gambling within our jurisdictions. The CFTC’s effort to federalize these decisions directly violates Tribal and state sovereignty while disregarding the choices we have made to protect our young people,” said Robbie McGhee, vice chairman of the Poarch Band of Creek Indians, in a statement Monday.
“The Commission’s own proposed rule acknowledges that prediction markets are susceptible to addictive behavior, yet it dismisses those concerns by claiming prohibitions will simply push the activity offshore,” McGhee said. “More troubling, the proposal never considers the dangers of exposing 18- to 20-year-olds to sports gambling under the misleading guise of financial products.”
The age point is the sharpest element of the tribes’ objection. Legal sports wagering in states that permit it generally sets a minimum age of 21. Commodities and securities accounts are typically available at 18. A framework that classifies sports event contracts as financial products therefore opens them to a three-year age band that every state gaming regime excludes.
Why Tribes Have a Particular Stake
The Indian Gaming Regulatory Act establishes the framework under which federally recognized tribes conduct gaming, and it requires tribes to operate within negotiated compacts, regulatory structures and revenue arrangements that do not apply to unregulated operators.
Tribal gaming operations therefore carry compliance costs and jurisdictional limits that a federally classified financial product does not. The tribes’ position is that this asymmetry undermines the regulatory bargain and the sovereignty that underpins it.
PCI’s Position in Alabama
The Poarch Band of Creek Indians is the only federally recognized Indian tribe in Alabama. Its Wind Creek Hospitality operation manages the tribe’s gambling facilities, including properties outside the United States.
Alabama has among the more restrictive gambling laws in the country, and repeated legislative efforts to establish a broader regulated framework have not succeeded. That leaves a situation in which activity prohibited by state law is nonetheless accessible through federally regulated apps.
The Other Side
Prediction market operators and their supporters argue that event contracts serve legitimate hedging and price-discovery functions, that federal commodities regulation is the appropriate framework for derivative instruments regardless of the underlying event, and that a patchwork of state-by-state prohibitions on federally regulated financial products would be unworkable.
They further argue that pushing the activity into offshore or unregulated venues — the concern the CFTC’s proposed rule references — would leave consumers with less protection rather than more.
Where It Stands
The CFTC has a proposed rule under consideration. Litigation involving prediction market operators continues in multiple jurisdictions, and the ultimate classification question may be resolved by the courts rather than by the agency.
Readers who believe they or someone they know may have a gambling problem can reach the National Problem Gambling Helpline at 1-800-522-4700, available 24 hours a day and confidential.