U.S. Rep. Gabe Vasquez (D-NM) pressed a key federal official last week about how prediction markets are regulated during a House Agricultural Committee hearing. He said these markets function just like sports betting, but without the same regulations, and that hurts tribal communities.
Michael Selig, chairman of the Commodities Future Trading Commission, has maintained that sports-related event contracts are different from gambling and they should be under his commission’s purview.
Vasquez pressed Selig to distinguish between two bets on the same baseball game and name which one was from a regulated major sportsbook, and which was from an event contract on a prediction market. Selig was unable to do so.
“Congressman I’m not an expert at identifying betting lines, so I’m not certain,” Selig said. “Why don’t you please enlighten me.”
“Well, it's clear to me that you can't tell, and that's the problem because the average consumer also can't tell,” Vasquez said.
Vasquez said prediction market platforms also do not have the protections of legal gambling.
“Tribes in my district and across the nation have gone through decades long negotiations, agreements and settlements with states and the federal government to have the ability to engage in sports betting. States themselves have as well,” he said. “They've built out legal gaming systems with compacts, licensing integrity rules, age verification and consumer protections.”
He met with tribal leaders at Isleta Pueblo recently who said the gaming revenue they rely upon to make the required 20% match for federal Head Start funds are at risk because of online gaming platforms.
Rep. Vasquez introduced an amendment to prohibit sports betting using prediction market models. He also co-sponsored another bill that would prohibit members of Congress and the Trump administration from entering into contracts. He said if they don’t prohibit this it’s going to lead to corruption issues.
Vasquez said when federal agencies allow prediction markets to bypass these requirements, it undermines tribal sovereignty. And it means tribal communities are losing revenue they need for child care, education and infrastructure.
On Friday, a federal judge temporarily barred Arizona from enforcing its state gambling laws against predictive market operator Kalshi. On Tuesday, New York sued Coinbase and Gemini arguing the companies unregulated and unlicensed platforms are illegal gambling operations. A number of other states are in court battles as well.
Members of both political parties in Washington are scrutinizing prediction market operators over questions of insider trading, fueling a betting addiction crisis among young men and offshore trades beyond the reach of U.S. regulators.
The Associated Press contributed to this report.
