California sports betting has taken on new urgency for tribal leaders, who estimate prediction markets have already reduced tribal gaming revenue by about 5% as exchanges such as Kalshi and Polymarket rapidly expand sports event trading.
Long viewed as the industry’s largest untapped market, progress on legalizing California sports betting has been stalled for years as tribes fought legalization efforts backed by commercial sportsbooks. Now, with prediction markets already offering sports event contracts in the state, tribes have largely shifted their focus to challenging the exchanges in court, arguing the products amount to illegal sports betting operating outside California’s gaming laws.
The estimated impact comes from preliminary studies by the California Nations Indian Gaming Association. Chairman James Siva told Tribal Business News that prediction markets are beginning to divert meaningful gaming revenue away from tribes.
“The rise of the prediction market is, without a doubt, the largest and most impending threat we have to tribal gaming and to tribal government and tribal sovereignty that we have currently,” Siva said. “It may be the biggest threat we’ve seen since the beginning of this industry.”
California sports betting timeline speeds up
Siva said that California tribes have been preparing for online sports betting since before the COVID-19 pandemic, including the unsuccessful 2022 ballot initiatives that sought to legalize retail and online wagering. The rapid rise of prediction markets, however, has accelerated those discussions.
Tribes initially struggled to measure the financial impact because the exchanges expanded so quickly, Siva said, but preliminary research now suggests meaningful revenue has already shifted away from tribal gaming operations. He added that tribes are responding both defensively and proactively as prediction markets continue gaining traction.
Tribal gaming generated more than $43 billion nationally during fiscal year 2023 and helps fund government services including public safety, healthcare, housing and education.
Working with AG to fight prediction markets
Siva argued prediction markets have created an uneven playing field by offering sports event contracts in California without going through the state’s constitutional process for expanding gaming or negotiating tribal-state compacts.
He said tribes spent decades establishing regulatory frameworks and consumer protections while building California’s gaming industry. Allowing prediction market operators to enter the state outside that process, he argued, undermines tribal sovereignty and existing gaming law.
Siva also said the association continues to work with California Atty. Gen. Rob Bonta while opposing legislation that would regulate only certain aspects of prediction markets. In the organization’s view, any measure short of an outright prohibition could strengthen the industry’s argument that the products are legal.
Looking ahead, Siva said he expects the dispute ultimately will be decided in court, potentially reaching the U.S. Supreme Court, a view widely held across the industry.
