Tribes invest more than $450 million annually, employing more than 6,000 regulators to oversee Indian gaming operations daily to ensure game integrity and maintain strict consumer safeguards and responsible gaming practices. Prediction markets that offer gambling through sports event contracts offer none of these protections and offer no benefit to the local community. Prediction markets are violating tribal, state and federal laws to offer illegal gambling with no regulation or oversight. In less than one year, these prediction market platforms have proliferated online in direct violation of tribal, federal, and state laws. The leading company took in more than $1 billion in volume in October with 90% of its revenue stemming illegal gambling on sports events. Although sports betting is explicitly banned in many states, prediction markets are aggressively advertising their products as “legalized sports betting in all 50 states.” They pay no taxes and contribute nothing to problem gambling programs. They ignore state laws that ban such activities from being available at schools, colleges and churches and refuse to comply with state and tribal laws intended to prevent harm to consumers and regulate gambling activities. Recently, Kalshi, a leading prediction market, advertised that its platform is “kind of addicting.” The proliferation and rapid expansion of these prediction market financial platforms into gambling activities such as sports betting is a public safety and health crisis. Because these companies can self-certify these event contracts under existing CFTC law and regulations, they go through no review or approval process at the CFTC or SEC before being made widely available to anyone with access to the internet. It is no coincidence that the prediction market corporations selected the CFTC as the financial regulatory agency to push out their self-certified self-regulated online gambling platforms. Complete inaction by the CFTC proves this point. Prediction markets have offered sports betting for 12 months now. Just weeks ago, the CFTC issued a statement that the agency quote / unquote “has not, to date, made a determination regarding whether” these contracts involve a prohibited activity. The prediction markets are counting on continued inaction by the CFTC. Congress must act to address these egregious violations of tribal, state, and federal laws. We respectfully ask your committees to reinforce the existing federal prohibition against using financial instruments for gambling and include the attached legislative language on any moving vehicle to protect consumers and state, local and tribal governments. Thank you for your timely consideration of this matter. Sincerely,
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