Gaming tribes take a stand against CFDs
Tribes Firmly Oppose Forecast Trading, Indicating Potential Legal Conflicts in Future
Multiple tribal gaming groups across the United States have banded together to challenge Contracts for Difference (CFD) offerings by prediction and event market operators like Kalshi and Robinhood.
CFDs pose a threat to tribal gaming rights
Recent reports indicate that the powerful Indian Gaming Association has added its support to the growing dispute surrounding CFDs potentially threatening tribal gaming rights. This unity forms the foundation for legal challenges ahead for the futures market.
The growing momentum around CFDs stems from political moves favoring the vertical, with heightened brand awareness since the Presidential election and Super Bowl LIV.
The united tribes' condemnation sets the stage for a potential legal battle against CFDs in the futures market.
Not in this alone
The Indian Gaming Association represents over 180 tribes, joining several other tribal bodies in sending letters to the Commodity Futures Trading Commission (CFTC) from February 10-22. These letters state that CFDs constitute an "illegal circumvention of state gambling laws."
As part of the CFTC's 45-day public comment period on CFDs, the tribal bodies submitted memos to the federal body. The CFTC has slated an in-person roundtable in Washington, DC on March 24 to "determine agency policy" concerning CFDs, as reported by Sportico.
The Indian Gaming Association contends that allowing "Sports Contracts" to be listed and traded would infringe upon the sovereign rights of tribes and states. They claim these contracts would encroach upon the tribes' exercise of their police power to regulate gaming within their respective territories, a right recognized in American courts for decades.
CFDs would undermine the value of tribal gaming compacts
The tribes also argue that CFDs would undermine the value of their gaming compacts with US states and affect their sports betting revenue.
Following a week during which Congresswoman Dinah Titus criticized CFDs as contradictory to state gaming regulations, and the American Gaming Association expressed "very strong concerns," the tribes' opposition has come to the forefront.
AGA weighs in on IGA's concerns
Reports indicate that the American Gaming Association's communication to the CFTC echoes its claims. The AGA's concerns stem from "recent self-certification of what are essentially sports betting futures, which are currently available to retail customers in all 50 states."
The AGA warns that these contracts pose an "unfair economic threat to sportsbook operators" and herald a nationwide betting product that circumvents state regulators. In addition, the AGA agrees with the Indian Gaming Association, stating that the availability of these products tramples upon tribal sovereignty.
Insights:- The Indian Gaming Association, alongside other tribal groups, has sent letters to the CFTC opposing CFDs, stating that they are illegal under state gambling laws.- The CFTC will hold an in-person roundtable on March 24 to determine their policy on CFDs.- Tribes fear that the introduction of CFDs will interfere with their sovereign rights to regulate gaming and their existing agreements with states.- The AGA has expressed concerns about the contracts' impact on sportsbook operators and the undermining of state regulations and tribal sovereignty.
The Indian Gaming Association, along with other tribal groups, has expressed concerns that the trading of Sports Contracts (CFDs) could infringe upon their business interests in the finance sector, specifically the sovereign rights to regulate gaming within their territories. This issue is further discussed with the American Gaming Association, who shares similar views that CFDs pose an unfair economic threat to business operations in the sports industry, potentially disrupting the existing revenue streams of sportsbook operators and undermining the value of tribal gaming compacts.
