Caroline Pham, Acting Chairperson Commodity Futures Trading Commission Page 4 of 13
exclusivity is a bargained-for benefit, often resulting from years of government-to- government negotiations between sovereigns. By encroaching on the sports betting market, Sports Contracts therefore infringe upon that exclusivity and undermine the sovereign rights of tribes and states, protected by IGRA, to negotiate mutually beneficial gaming compacts. Additionally, the sports betting conducted pursuant to IGRA compacts or in accordance with state gaming regulations afford both tribes and states substantial revenue streams that fund important government services. However, Sports Contracts diminish the market share for regulated sports betting, which reduces revenues for tribal and state governments. For tribes, this revenue funds essential tribal government services, which directly benefits the lives of their tribal citizens. This revenue is critical for tribal governments because they oftentimes do not have access to revenue sources typically available to sovereign governments, such as taxes or unimpeded land and natural resource development. For states, in addition to receiving revenue under IGRA compacts, the tax revenue from sports betting is significant. For example, in states that have legalized sports betting, at least $1.8 billion in tax was collected in fiscal year 2023. See Adam Hoffer, Bets on Legal Sports Markets Pay Off Big for States, Sportsbooks, and Consumers , Tax Foundation (Dec. 10, 2024) (accessible here). States generally impose high tax rates on sports betting operators to fund state programs to regulate and mitigate impacts of gaming. See Adam Hoffer, Online Sports Betting Taxes by State, 2024 (Sept. 17, 2024) (accessible here). Finally, despite sharing all the hallmarks of gaming, and indeed qualifying as “Class III gaming,” as discussed below, Sports Contracts and registered exchanges are not required to provide the same public health and consumer safety measures as lawful gaming operations. Moreover, Sports Contracts and registered exchanges are likewise not required to share revenue with state governments meant to defray the costs of addressing such impacts. Thus, while potentially facilitating certain harmful impacts, Sports Contracts and registered exchanges are not required to help prevent, counteract, or mitigate such impacts in contravention to the public wellbeing. In addition, it is significant that some states have decided not to allow sports betting at all, which means Tribes in those states are unable to offer sports betting under IGRA. Sports Contracts and registered exchanges would impose sports betting without any regard to the public policy determinations made by the elected leaders in those jurisdictions. II. Sports Contracts Are Contrary to the Public Interest. While it is clear, as discussed above, that Sports Contracts are contrary to public policy—particularly with regard to tribal and state sovereign rights—they are also
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