Amelia Schafer
ICT
MILWAUKEE, Wisconsin – A growing divide between leaders in the tribal gaming industry has widened following the announcement Wednesday of four more tribes joining prediction market giant, Kalshi, to engage in the growing online gaming market.
Kalshi announced Wednesday its new partnerships with the The Alabama-Quassarte Tribal Town of Oklahoma, the Greenville Rancheria of California, the Kletsel Dehe Wintun Nation and the Alturas Indian Rancheria. The news follows the Sept. 18 announcement that the Tunica-Biloxi Tribe of Louisiana, would be the first tribe to partner with Kalshi.
The announcement falls during an ongoing battle between Indian gaming leaders and prediction markets, which Indian gaming industry leaders say are operating illegal online gaming services under the guise of “event trading” at the expense of hard fought exclusive tribal gaming rights. Leaders said they fear competition from prediction markets will cut into gaming revenues used by tribes to administer health care, education, housing, public safety, and other governmental services.
But there is also tension within the ranks of the Indian gaming industry.
“Absolutely, there’s a growing divide,” said Mike Stopp, chief executive officer and principal of SevenStar Holdings, a company created to assist in economic development in Indian Country. Stopp, Cherokee and Muscogee. “Indian Country, a lot of people don’t realize, is very competitive in the resources because the resources are so limited … and there is a distinct difference in the gaming world (where) 54 percent of gaming revenue goes to 9 percent of the tribes who participate in casinos.”
Stopp serves as the Alabama-Quassarte Tribe’s vice president of economic development.
ICT was unable to immediately reach the Greenville Rancheria, the Kletsel Dehe Wintun Nation for comment.
Alturas Indian Rancheria Chairman Phillip Del Rosa said he was unable to comment at this time.
Each of the four tribes that are entering the prediction markets will launch its own app with help from Kalshi. Tribes will maintain ownership of their respective app, its brand, marketing and usage, while Kalshi will operate the “layer beneath” referring to behind the scenes work of making each app function in accordance with federal law, according to a statement from Kalshi. While the individual tribes own the apps, each platform’s software is powered by Kalshi.
The less than 800 member Alabama-Quassarte Tribe exists within the boundaries of the Muscogee Nation in eastern Oklahoma. Because of this shared geography, the Alabama-Quassarte cannot operate its own gaming facilities, Stopp said.
“Ultimately their gaming rights were taken from them, and they are no longer able to operate gaming within their territory,” Stopp said. “The tribal members of the Alabama-Quassarte are some of the poorest in the country, they’re struggling all the time, and so they’re constantly looking for ways to generate revenue to help their tribal members.”
The new announcements follow months long legal battles between tribal governments and Kalshi. The tribes maintain that Kalshi and other prediction market platforms violate the gaming exclusivity promised under the Indian Gaming Regulatory Act of 1988.
But tribes like Alabama-Quassarte say they’ve been left out of benefitting from the gaming law.
“IGRA (Indian Gaming Regulatory Act) was not equal,” Stopp said. “Not every tribe in this country has the same access to the markets that some of these larger tribes do. I find it very unfortunate that these larger tribes, who have benefited so well from gaming, are taking the same stance that states took in 1988 against tribes using gaming as a way of generating revenue.”
Indian gaming industry leaders said they feel the tribes are being used as pawns by prediction markets. The four tribes whose partnerships were announced on Wednesday all are located in areas without a large gaming market, meaning traditional gaming hasn’t brought them the same success as tribes in metropolitan areas, said Victor Rocha, the conference chair of the Indian Gaming Association.
“This is the oldest strategy in the book, which is to pick off the weak and the lame,” Rocha, Pechanga, told ICT Thursday. “In hunting, that’s what you do. And here, you go to the tribes that have nothing.”
Rocha said he felt it was a strategically planned move on Kalshi’s part to partner with a tribe in California and tribe in Oklahoma – both states have their own gaming associations who have each spoken out against Kalshi.
“You find these small tribes that don’t have gaming and then you promise them the world,” Rocha said. “They’re just being used as set dressing, and it stops nothing. It doesn’t stop our strategy. We keep going forward, and when we’re done, and when we succeed, we will go back, pick them up, dust them off, and put them back in the game.”
Stopp disagreed with Rocha’s statement, emphasizing that the partnership is an example of the Alabama-Quassarte Tribe and other smaller tribes to pursuing different avenues towards economic development.
“To say that they’re being used isn’t fair at all,” Stopp said. “The Alabama-Quassarte Tribe would not have participated in this, I would not have taken this to them as an opportunity, if there was not a real economic opportunity. This is not just trying to develop what some might call ‘Red-cover’ to legitimize what they’re doing. It is a legitimate economic business that will produce legitimate economic benefits for the tribal members.”
The California Nations Indian Gaming Association, the Oklahoma Indian Gaming Association, Indian Gaming Association and tribes of Wisconsin and Florida remain united in calling for an end to prediction markets, Rocha said.
“There’s nothing organic about Kalshi or their messaging, there’s nothing organic or original about this strategy,” Rocha said. “It’s been done before, and it’s going to have the same results as last time, which is that it’ll be a failure. It doesn’t stop anything.”
Additionally, Rocha warned that a clause hidden within a Sept. 17 letter from the Commodities Future Trading Commission could be opening tribes up to lawsuits.
Tribes operating casinos under the terms of the Indian Gaming Regulatory Act are afforded certain legal protections known as sovereign immunity that shield them from potential lawsuits.
Deals between tribes and organizations like Kalshi, such as those announced Wednesday, fall outside of these protections and the tribes must waive their right to sovereign immunity which opens them up to potential future lawsuits.
The potential of lawsuits was something the Alabama-Quassarte Tribe took into consideration when weighing the benefits of a partnership with Kalshi, Stopp said, and ultimately decided the benefits outweighed the potential downfalls.
“While I hear what the gaming tribes are saying, at the end of the day, I think they need to remember just exactly what we’re talking about here,” Stopp said. “We’re talking about a sovereign choice by a sovereign nation to determine how they are going to engage in the economy, in the same way that gaming gaming tribes choose to engage in the economy using casinos. Every tribe has its right to engage in the economy as it uses it. In this particular case, we respect the sovereignty of other tribes to conduct gaming on their reservations.”
Meanwhile, tribes across the United States continue to launch lawsuits against Kalshi and other prediction markets.
Thursday morning, the Seminole Tribe of Florida filed a lawsuit against DraftKings, Inc. and its Chief Executive Officer Jason Robins. The lawsuit, filed in Broward Circuit Court, alleges Draftkings is operating an illegal sport betting business in Florida in violation of state law and a 2021 Gaming Compact between the State of Florida and the Seminole Tribe.
“Every wager that Defendants now accept through their illegal sportsbook siphons away revenue that funds both the tribe’s and Florida’s public programs and government services; diverts betting from Florida’s regulated system into an underground, unregulated, and outlawed book; and deprives the Floridian who places such a bet of the consumer protections guaranteed by Florida law,” the lawsuit states.
Stopp said he has yet to see any data indicating prediction markets are negatively impacting revenue generated through traditional Indian gaming.
“I think that the challenge is that right now you’re hearing from the tribes that have money, so they’re the ones that have a marketing machine out there to go out and talk,” Stopp said. “They’re the ones that have the incentive to raise litigation questions. It is the smaller tribes that have been left out of the benefits of [the Indian Gaming Regulation Act] that do not have a loud voice right now, and it’s because they don’t have the same economic resources that these other tribes have. This is an opportunity for tribes to engage and to grow their economic base to help their citizens in the same way the 1988 IGRA passage helps those gaming tribes who are earning from it now.”
