▶ 0:18:36Chair Murkowski: -- go ahead and begin. Thanks, folks, for joining us this afternoon for this roundtable. We are here in the senate indian affairs committee, and this is an issue prediction markets is is an issue that has generated a fair amount of interest, I'd suggest, as I look to my vice chairman; interest
▶ 0:19:08Chair Murkowski: And concern and desire to have if not more action, and open conversation with what we are seeing in the prediction markets, and more important to that, what it means for tribal entities -- the tribal implications and beyond.
▶ 0:19:25Chair Murkowski: Here in the committee we have been vital tribal--we have invited tribal, state, and public health leaders to examine the growth in prediction markets and what that means for tribal governments, consumers, and communities. I will be the first to admit that I was asleep at the switch when it came to what was going on with prediction markets. I don't know, maybe you were more involved with this. I was not.
▶ 0:19:51Chair Murkowski: I was looking at them as kind of this novelty thing, and our reality is today millions of americans are using them. One leading platform reports having more than 5 million monthly active users. And these platforms are really being integrated into everyday life, but they are raising important questions about the utility and safety of prediction markets and legal status of the event contracts that are being bought and sold on these platforms.
▶ 0:20:20Chair Murkowski: The number and variety 11 contracts individuals can-- of event contract individuals can buy has exponentially increased. It's fascinating what is out there. You can bet on whether the federal reserve is going to cut rates this year, what the high temperature in new york is going to be. It is all over the board, and we all know that.
▶ 0:20:45Chair Murkowski: And again, I think we are still in the early stages of this industry, and many of the most important legal questions remain unsettled. Courts across the country are currently considering whether sports-related event contracts are a form of gambling. Many tribes and states argue that these export event contract amount to sports betting, and therefore should be subject to state and tribal gaming laws.
▶ 0:21:12Chair Murkowski: Cftc in contrast takes the position that these contracts are swaps, a financial derivative, and a federally regulated financial instrument under the exclusive jurisdiction of the cftc. Cftc has recently proposed new rules on production markets and the type of events that contracts may or may not make in the public interest.
▶ 0:21:35Chair Murkowski: Senator schatz and I sent a letter urging the cftc to conduct formal tribal consultation because the rulemaking is far-reaching and it can have significant implications for tribal gaming. This is a concern to us in this committee.
▶ 0:21:51Chair Murkowski: We all know the importance, the success that tribal gaming has had for indian country in terms of supporting essential tribal governmental needs, social and economic services to help perpetuate, protect tribal practices and languages as well as funding donations to state and local governments. But the benefits that are spread are well recognized.
▶ 0:22:18Chair Murkowski: Fy2025, tribal gaming operations generated a record $46.2 billion in gross gaming revenue. The broader economic output of indian gaming was estimated at approximately $110 billion in the U.S., and that includes jobs, wages, and activity in supporting industry. I think it speaks to the point about a disruption to the gaming industry and the consequences that would go far beyond casino operations.
▶ 0:22:47Chair Murkowski: It could affect tribal governments, families, and rural areas at a time when many are dealing with increased prices and constrained economic growth. What is clear is that prediction markets will have impacts on the economy, communities, and families around the country. What is unclear is the full nature and extent of these impacts.
▶ 0:23:08Chair Murkowski: We are happy this afternoon to have participants around the table who will share their views from tribal, state, and public health perspectives. Thank others that are part of the committee as well as the senator boozman -- we welcome you to the indian affairs committee room for this important and timely conversation. Vice chair schatz.
▶ 0:23:35Sen. Schatz: Thank you, chairman murkowski, and thank you to all the testing the testinfyers and everyone in this packed house. I've met with many of you and heard about the impact of unregulated trading on production markets on your gaming enterprises. I want to quote a federal judge in the ninth circuit on pending litigation.
▶ 0:23:59Sen. Schatz: "it looks like gambling to me." you know, a lot of us are so hyper educated and hypertechnical in our thinking that we forget to look at the app and see how it may or may not differ from fanduel or mgm sports betting.
▶ 0:24:19Sen. Schatz: And the real answer is if you want to bet on the philadelphia 76ers to win the nba championship, you can do so through a gambling app, or you can do so through a prediction market app. The consumer experience is exactly the same. It is not a commodities contract to hedge against the variability and the price of fertilizer or corn or any other input.
▶ 0:24:53Sen. Schatz: It is a work around of federal gaming law, generally speaking, in the indian gaming regulatory act. -- and the indian gaming regulatory act. I'm glad that on a bipartisan basis we are starting to raise the alarm not for any specific sort of mercenary protection question between gambling operations, but because what this new avenue for gambling does is threaten to essentially
▶ 0:25:25Sen. Schatz: Eviscerate the budget of indian country across the country. And I've met with you and I've heard from you, and it definitely differs by tribe. But there are some people now meeting in tribal council trying to figure out what to cut. Public safety, education, infrastructure.
▶ 0:25:48Sen. Schatz: And so we worked really hard on the indian affairs committee and the appropriations side on the ihs budget, bie budget, bia budget, and so on. And what is about to happen to indian country's revenue pales in comparison to anything we could do to replace it. We all have to have a kind of family conversation about how we are going to sort out the various opportunities to gamble.
▶ 0:26:14Sen. Schatz: I should say game -- sorry, catherine, I should say "game" and not "gamble." [laughter] I like gambling. [laughter] personally. Yeah. But this is a very serious moment, and I really applauded the chair of the indian affairs committee and agriculture committee for being here to take this very seriously, and look forward to the conversation.
▶ 0:26:38Chair Murkowski: Great. We do have colleagues that are here -- I would love to give everyone a second to make a statement if you would like, or we can just go to our witnesses. Happy to open it up. >> thank you so much, chair murkowski. I'm interested in this conversation and I don't need to make an opening statement, for the chance to hear from everybody.
▶ 0:27:00Chair Murkowski: Senator boozman?
▶ 0:27:02Sen. Boozman: Likewise, I just want to thank you two for having us. It is really important and I'm very, very anxious to hear what it established panel says. --what our disagrees panel says. Thank you.
▶ 0:27:15Chair Murkowski: Excellent. Senator from the gaming state of listen, I appreciate the conversation, this is important and in every I've been hearing from our tribes, gaming hotels and casinos, gaming properties across the country, antilabor, that at the end of the day, when we are talking about these prediction -- and labor, that at the end of the day when we are talking about these prediction
▶ 0:27:46Chair Murkowski: Markets, they are actively engaged in sports gaming or casino style gaming. I think what I've heard from the tribes in the gaming community across the country is that it is not that they don't -- it is not that they want to outlaw them altogether. It is that they want to preserve the right to regulate in their space. The tribes have regulated this in their space, all right, and indian law has given you the ability to regulate it.
▶ 0:28:13Chair Murkowski: States have traditionally, like nevada, have had the opportunity to regulate them. That is all they are looking for. Right now we have a federal government and the cftc that wants to take that away. That is what I am hearing from so many. We will hear the repercussions of why they want to preserve to regulate it. I appreciate this conversation because there is more to this conversation then I think many of us need to hear. Thank you.
▶ 0:28:38Chair Murkowski: We will turn to those we have invited to join the committee. I'm going to ask you to try to keep your comments relatively brief so that we can have a broader conversation. This is not a hearing, this is a roundtable. And so the opportunity for engagement so we can ask more questions of you is appreciated. I know you all have statements, those are all going to be included as part of the record of this roundtable.
▶ 0:29:07Chair Murkowski: I am just going to ask you to start off, as the vice chairman of the indian gaming association, the honorable cossey help -- tes cossey help -- tehassi hill.
▶ 0:29:20Mr. Hill: Good afternoon. My name is tehassi hill and I am the vice chairman of the indian gaming association and chair of oneida nation. I want to make clear that indian country is rural america. We are farmers and growers we support responsible innovation and hedging risks and ensuring fair pricing.
▶ 0:29:41Mr. Hill: We are strongly opposed to prediction markets that have manipulated a weak regulatory agency to offer nationwide online sports gambling to kids as young as 18. We reviewed this issue from a governmental lens. I would like to share some historical context. In the 1970's, tribes turned to gaming as a tool to generate revenue for basic program services for our citizens.
▶ 0:30:08Mr. Hill: This was the same time that dozens of state governments started their lotteries to generate revenue for their citizens. Every dollar generated by indian gaming goes to fund health care and education for our children, housing for our elderly, and public safety and infrastructure. Indian gaming generates jobs. In 2025 we delivered more than 682,000 jobs for rural american families.
▶ 0:30:35Mr. Hill: These jobs provide stable income and a path to the middle class for tribal citizens and nonmembers alike. In areas where these jobs would not exist otherwise we worked under the framework for over 40 years carefully negotiating agreements with states to strictly regulate gaming. Tribes invest more than $450 million every year on gambling regulation, employing more than 6000 regulators to oversee our operations.
▶ 0:31:04Mr. Hill: Every tribe engaged in gaming maintains a strict age requirements. We invest and problem gambling programs that include treatment, education, self exclusion, and staff training. Prediction markets threaten these rural jobs and revenue generated for tribes and state governments' budgets by violating our laws and regulations. They claim to be innovators, but they've invented nothing. Prediction markets offer bets identical to those legal regulated sportsbooks.
▶ 0:31:35Mr. Hill: Money lines, totals, parlays, prop bets. The only difference is production markets avoid our regulatory systems to protect consumers and the integrity of american sports. Another big offense is they ignore strict age requirements and problem gambling programs we have established. Prediction markets target young people and those in jurisdictions where sports betting is primitive.
▶ 0:31:59Mr. Hill: The ever tax -- they advertise on tiktok and hire influencers who claim they are a side hustle, without revealing the risks of gambling. The ceo attempted to equate sports contracts to financial literacy. This is misleading and dangerous . Today, thanks to one agen cy, every teenager with a smart phone can lose their shirt without leaving their house or their dorm room.
▶ 0:32:27Mr. Hill: We are starting to see the devastating impact on our kids' mental health and their finances. No one voted for this. Congress did not pass a law. This is happening because one person declare that online sports gambling is legal in every state, including hawaii and alaska, and on every indian reservation. Tribal governments are not alone in this fight.
▶ 0:32:50Mr. Hill: We are proud to work alongside organizations represented here today -- the national conf congs of american indians, the national tribal gaming commissioners and regulators. We are glad to be joined by regulator and more than one million casino workers through the united states were fighting to protect good paying american jobs.
▶ 0:33:10Mr. Hill: Finally, tribal gaming is aligned with 44 state attorney generals who have filed a legal briefs in federal and state courts and comments to the cftc, including the state of ohio, who's represented here today. The list includes the state attorney generals from nearly every member of this committee. They are fighting to enforce laws in their states, your states. Some of these laws prohibit all forms of gambling. Some prohibit online gaming.
▶ 0:33:37Mr. Hill: Some rely on revenue from gaming to support their communities. In closing, I will leave you with three requests. One, we urge you to advance s4 160, prediction markets are gambling act. Two, we ask you to ensure the clarity act stops all sports and casino gambling through prediction markets and provides state and tribal gambling laws are full force and effect.
▶ 0:34:02Mr. Hill: And three, we urge you to stop the outrageous cftc rule proposed that constitutes the height of regulatory agency capture. Thank you for this opportunity, and we look forward to this discussion.
▶ 0:34:14Chair Murkowski: Thank you very much. We will now turn to the president of ncai, mark macarro. Thank you, chairman, president. [laughter]
▶ 0:34:26Mr. Macarro: Thank you, chair murkowski, ranking member schatz, the other distinguished members of this committee for holding this roundtable on prediction markets. My name is mark macarro, and I'm the president of ncai, national countries of american indians, and the tribal head of the pechanga band of indians in california. I want to raise a few points. The first is the regulatory act, that it must be respected.
▶ 0:34:55Mr. Macarro: Congressional intent was clear when the act was promulgated, that congress never intended the commodity exchange act to print the indian gaming--preempt the indian gaming regulatory act. When congress passed igra, it was unambiguous. Congress held exclusive jurisdiction operating through a framework built on tickets and negotiation between tribes, states, and the federal government. For over 30 years that framework has worked.
▶ 0:35:20Mr. Macarro: Tribes and states negotiated compacts to protect consumers and ensure regulatory accountability and affirmed and strengthened tribal sovereignty. This framework did not happen by accident. It was built deliberately through hard-won negotiation and sustained efforts. But watching a fundamentally distinct federal agency stepped into this space without authority, without consultation, and without regard for the existing framework is deeply troubling.
▶ 0:35:51Mr. Macarro: It usurps all the infrastructure for successful tribal gaming. Today, prediction markets are being used to offer supports and events entirely outside the framework congress created for indian gaming, undercutting the tribal nations' status as a sovereign regulators into space. By relying on commodities and derivatives law instead of giving law, operators are able to sidestep igra altogether.
▶ 0:36:17Mr. Macarro: This sets up a dangerous precedent where federal agencies can bypass congressionally from tribal rights whenever it is convenient. Provided that they dress the workaround in unfamiliar legal language. Make no mistake, nothing in the legislative history of the cea suggests congress ever intended the cftc to become a backdoor regulator of gaming.
▶ 0:36:40Mr. Macarro: Cftc was created to oversee commodities and derivatives, not to create, tolerate, or bless a shadow framework for sports and event betting that congress never authorized it to regulate. In fact, the legislative record confirms this. During the 2010 dodd-frank debate, senator blanche lincoln, the senate agricultural committee -- chair of the ag committee, an offer of the dodd- frank derivatives amendment,
▶ 0:37:10Mr. Macarro: Engaged in a colloquy with senator dianne feinstein making this point explicitly. Senator feinstein emphasized the importance of restoring deceived is the's authority to stop trading--cftc's authority to stop trading that runs contrary to the public interest, with . Senator lincoln went further, stating plainly that the cftc needed the power to prevent derivatives contracts that exist predominately to enable gambling through so-called event contracts.
▶ 0:37:39Mr. Macarro: Senator lincoln specifically want it would be easy to construct event contracts around sporting events like the super bowl, the kentucky derby, or the masters, contracts that would serve no legitimate commercial purpose and exist solely for gaming.
▶ 0:37:53Mr. Macarro: I will add that this year's super bowl in san francisco, one of these prediction market operators, kalshi, wagered -- there were over $1.5 billion that were wagered on the super bowl through kalshi's platform alone.
▶ 0:38:15Mr. Macarro: A couple weeks ago we heard from senator christopher dodd, the author of the dodd-frank act, who stated that lawmakers were well aware of existing federal and state gaming laws and had "no intention of amending those laws to trim the cftc into a national gambling regulator." this is not ambiguous legislative history. This is congress on the record warning exactly against what we are seeing play out today.
▶ 0:38:40Mr. Macarro: Fundamentally, the cftc's claim of authority to regulate prediction markets represent a sweeping federal overreach that threatens tribal and state sovereignty and separation of powers issue, where an executive branch agency defies statutory authority and congressional intent. Ncai calls on the united states congress to exercise its constitutional prerogative and end the prohibited gaming under this captured agency.
▶ 0:39:08Mr. Macarro: The second issue is revenue generated from tribal gaming operations and that it funds critical services for tribal and nontribal members alike come and cftc-regulated contracts that mimic casino style gaming threatened this source of support. Tribal gaming -- tribal gaming revenue is not simply a matter of tribal enterprise. It is the financial backbone of essential services in indian country.
▶ 0:39:35Mr. Macarro: This revenue funds health care, education, infrastructure, and other programs of tribal communities depend on every day. When that revenue is diverted, so, too, is the ability of travel governments to meet--tribal governments to meet their response abilities to serve the citizens. Every dollar wagered on unregulated gaming like illegal prediction markets is the dollar pulled away from tribal jobs, facilities, and community programs.
▶ 0:40:04Mr. Macarro: These events contracts are not a neutral alternative. They compete directly with regulated tribal gaming through the same consumer dollars, but without the compacts, without oversight, and without revenue-sharing obligations that channel gaming proceeds back into public services. And the scale of what is at stake is significant.
▶ 0:40:25Mr. Macarro: Tribal gaming supports hundreds of thousands of jobs in the united states, a majority of which are in rural america and generates billions of dollars of annual economic activity, activity that could be steadily eroded as an unregulated events contract market siphons off this revenue, the tribal revenue. Tribal gaming revenue doesn't just support tribal communities.
▶ 0:40:50Mr. Macarro: It funds critical services for non-natives as well, allowing the cftc-regulated event contract to encroach on this space does not just threaten tribal sovereignty and self-sufficiency, it threatens our funding stream that benefits the state and local economies throughout the nation. Remember, tribal nations are stakeholders in a tribal gaming. We are not shareholders. Third, the cftc must engage in meaningful consultation with tribal nations. Consultation is not a courtesy.
▶ 0:41:21Mr. Macarro: It is a legal and moral obligation the federal government owes to sovereign tribal governments, affirmed time and again through treaties, statute, executive orders, and the government-to-government relationship that defines federal policy. And yet the cftc is advancing prediction market products that function like you gaming without ever sitting down with the tribes, whose economies and legal rights are directly in the crosshairs.
▶ 0:41:50Mr. Macarro: There has not been a formal notice, nor a meaningful dialogue, and not even an acknowledgment that as a federal agency, the cftc does have a responsibility to tribal nations to consult. This failure is especially glaring given the stakes. We are not abstract policy questions.
▶ 0:42:10Mr. Macarro: All these issues, especially the lack of consultation, strikes at the heart of tribal sovereignty, as compacts negotiated in good faith with state governments and revenue streams that fund the schools and clinics and housing that our people rely on. When a federal agency's actions carry that kind of wait for tribal communities, the duty to consult is not optional, it is fundamental. So we employ the cftc to sit down with tribal leaders before you act, not after.
▶ 0:42:41Mr. Macarro: Respected the tribal government, the government-to-government relationship that the constitution and federal law and generations of precedent demand. Because when you regulate, or fail to regulate, products that reach directly into our economies, you are not just making policy decisions, you are making a decision about our future.
▶ 0:43:00Mr. Macarro: And we have every right to be in the room when that decision is made, the writer transparancy, do notice--right to transparancy, due notice, and good-faith engagement, none of which we have received to this point. I will stop their peer thank you.
▶ 0:43:14Chair Murkowski: Thank you. Jamie hummingbird is the chairman of the national tribal gaming commissioners and regulators. Welcome.
▶ 0:43:24Mr. Hummingbird: Thank you, chairman murkowski, vice chairman shots, and members of the committee. I'm pleased the here before you on behalf of the national typing gaming commissioners and regulators, 6000 men and women that are effectively regulating tribal gaming across the country today, protecting the integrity of the indian gaming regulatory act, tribal state contacts, and the federal trust responsibility voted to tribal nations.
▶ 0:43:51Mr. Hummingbird: I appeared today because the rapid expansion of sports wagering prediction markets poses an immediate threat to tribal sovereignty through the integrity of the indian gaming regulatory act and governmental revenues that go to so many vital tribal services. These products are marketed as financial instruments, commodities, derivatives, or swaps. But let's be clear here today and call them by their true name.
▶ 0:44:22Mr. Hummingbird: You wagered something of value on the outcome of a sporting event, it is sports wagering. Relabeling the waiter as an event contract or derivative does not change what it is. If the federal government permits cftc-regulated platforms to offer sports wagers outside of tribal and state gaming systems, it will create a federal loophole that passes igra, undermines tribal state contract, and displaces nearly 40 years of hard-won
▶ 0:44:52Mr. Hummingbird: Intergovernmental cooperation. As I'm sure you are aware, congress enacted igra in 1982 promote tribal economic involvement, tribal self-sufficiency, and strong tribal governments while ensuring that tribes remain the primary but hidden primary but beneficiaries over gaming on indian lands. Igra creates a balance between tribal sovereignty, federal oversight, and class three gaming, state comebacks approved under federal law.
▶ 0:45:20Mr. Hummingbird: For nearly 40 years, sports wagering has fallen squarely within the class iii framework and must be conducted through a robust regulatory control and made possible through tribal state compacts carefully negotiated between sovereign states and tribes. That framework is a federal indian law success story.
▶ 0:45:39Mr. Hummingbird: Tribal gaming commissions work daily with state regulators and the national gimme commission to address licensing, audits, patron protection, game integrity, response will gaming, facility safety--responsible gaming, facility safety, and compliance. We are a local unaccountable form of regulation. The cftc is not --local and accountable form of regulation. The cftc is not a gaming regulator.
▶ 0:46:07Mr. Hummingbird: It does not have the geolocation oversight or surveillance expertise to compare to what the tribal regulators exercise every day. Recent market conduct confirms the seriousness of this event. In nevada, the nevada gaming control board accepted the surrender of fanduel approvals and approved withdrawal request for draftkings's pending sports wagering applications after concluding that the contract activity was incompatible with
▶ 0:46:37Mr. Hummingbird: Participation in the gaming industry public reporting likewise states that draftkings and fanduel abandoned or withdrew nevada licensing efforts while pursuing prediction market products. This is not a technical licensing footnote. It is evidence that major national sportsbook operators understand prediction markets as an alternative path around traditional gaming regulation. The economic impact is direct and harmful.
▶ 0:47:06Mr. Hummingbird: Indian gaming revenues are at risk. They fund all of our essential services we provide to our tribal citizens. Market platforms extract value from the local communities without compact obligations, tribal licensing, state and tribal revenue-sharing obligations, or dedicated contributions to problem gaming mitigation. Consumer protection is also at stake.
▶ 0:47:33Mr. Hummingbird: Tribal gaming regulars enforce licensing, annual audits, responsible gaming safeguards, age and identity verification, as well as market integrity protections. Prediction market sports contracts do not have an equivalent protection. The national loophole for sports wagers risk underage participation, inadequate geo-fencing, and weak responsible gaming protections.
▶ 0:47:59Mr. Hummingbird: Federal consultation obligations reinforce the need for caution. The policies that have six dental--substantial and direct effects on tribal nations, the distribution of power among sovereigns requires meaningful government-to-government consultation. Consultation cannot occur after an agency has allowed markets to develop in a matter that impairs tribal gaming authority. It must be timely, it must be substantive, and it must be capable of affecting the outcome.
▶ 0:48:28Mr. Hummingbird: The anti-gcr -- ntgcr asks congress to act quickly and decisively. Congress should make clear that sports-related gaming sports-related ga event contacts are gaming products.
▶ 0:48:46Mr. Hummingbird: Second, congress should enact express savings language confirming that nothing in the commodity exchange act, the clarity act, or any federal market structured legislation prevents supersedes, -- preempts, supersedes, impairs, or limits Ms. sridharan or limits Ms. sridhar -- or limits igra or other protections.
▶ 0:49:09Mr. Hummingbird: Congress must direct the cftc to halt the approval of event contract until the agency completes formal government-to-government consultations with tribal nations" donates with the tribal gaming regulatory authorities. Federal financial regulation must never be used to gloss over or erase tribal sovereign gaming jurisdiction by means of regulatory rebranding. The question before policymakers is not whether innovation should be allowed.
▶ 0:49:37Mr. Hummingbird: Tribal nations who have been longtime proponents of the rule of law have supported innovation, if not have led the way in innovation in the gaming industry through lawful gaming environments. The question today is should private platforms be allowed to use financial market terminology to avoid gaming law, bypass travel regulators, undermine tribal state compacts, antisiphon governmental revenues for native communities.
▶ 0:50:05Mr. Hummingbird: -- and siphon governmental revenues for native communities. The answer must and should be an emphatic no. On behalf of regulators to protect the industry of indian gaming every day, I respectfully ask this committee to defend igra, uphold the federal trust responsibility, require the cftc and other companion federal agencies to engage in meaningful tribal consultation, and ensure that no federal agency or private market actor is permitted to erode tribal sovereignty through prediction market rebranding.
▶ 0:50:38Mr. Hummingbird: I thank you again for the opportunity to share this information with you and appreciate the meaningful and long-lasting impact the prediction markets and sports betting will have on indian country, as well as the nation as a whole.
▶ 0:50:47Chair Murkowski: Thank you. Next we will hear the states' perspective. Solicitor general from the state of ohio, the honorable mathura sridharan. Welcome.
▶ 0:50:59Ms. Sridharan: Chairman murkowski, vice chairman schatz, members of the committee, thank you for inviting me to speak today. It is a privilege to appear before you on behalf of the state of ohio, and I appreciate the opportunity to share the state's perspective on the regulatory challenges posed by sports betting on prediction markets.
▶ 0:51:22Ms. Sridharan: My office first became involved with prediction markets in early 2025, when prediction market platforms like kalshi began offering sports bets on their trading platforms. Since then, ohio has been at the forefront of the litigation surrounding these issues.
▶ 0:51:41Ms. Sridharan: We have litigated them in the sixth circuit, coordinated bipartisan state participation in litigation around the country, and let a coalition of 44 states in responding to the commodity futures trading commission's proposed rulemaking. For more than two centuries, gambling has been regulated in our federalist system primarily by the states.
▶ 0:52:05Ms. Sridharan: That is because gambling has long been understood as implicating the states' responsibility to protect the health, safety, and welfare of their citizens. In murphy v. Ncaa, the supreme court reaffirmed that principal, holding that absent federal legislation, states remain free to make their own policy choices about whether and on what terms to authorize sports betting.
▶ 0:52:35Ms. Sridharan: Some prohibit sports betting altogether. Others, like ohio, chose to authorize sports betting only after extensive public debate, and ohio after a constitutional amendment approved by a narrow margin of voters. The federal government's role has been historically different. For about a century, congress has regulated financial derivatives markets through the commodity exchange act.
▶ 0:53:04Ms. Sridharan: Those markets exist to serve commercial purposes. They help businesses hedge risk, facilitate price discovery, and allocate capital efficiently. Federal law was designed to ensure that those markets are fair, liquid, transparent, and free from manipulation. Markets that attract speculation require one kind of regulator. Markets founded on speculation, like sports betting, require a different kind of regulator altogether.
▶ 0:53:36Ms. Sridharan: Sports betting is fundamentally different from traditional derivatives. A wager on whether the ohio state covers the spread is not managing commercial risk or facilitating price discovery, nor is it helping producers or consumers hedge against future uncertainty. As one prediction market put it, these buttocks existing really for diversion--these products exist merely for diversion and amazement. That critically informs the regulatory response.
▶ 0:54:06Ms. Sridharan: Federal law, like the commodity exchange act, is a sophisticated and highly effective framework for regular in financial markets. But it is a blunt tool for addressing the public health and consumer protection challenges that accompany gambling, because it was designed to protect and police market integrity. Not to protect casual bette not to protect casual bettors from the unique crimes of gambling.
▶ 0:54:34Ms. Sridharan: States regulate gambling differently because they are trying to solve a different problem. The focus is not facilitating market transactions through carefully defining mechanics. Their focus is protecting participant in a gaming environment. State gambling laws ask different questions. Are vulnerable individuals protected? Are operators promoting responsible gambling? Are sporting events insulated from corruption?
▶ 0:55:00Ms. Sridharan: To address these consumer-focus concerns, some states, for example ohio and new jersey, impose minimum age requirements for placing sports wagers. States generally require betting operators to obtain licenses, verify ages, reports his position -- report suspicious betting activity, maintain responsible programs, and administer voluntary exclusion programs for individuals struggling with gambling addiction, among other things.
▶ 0:55:30Ms. Sridharan: Prediction markets bypass many of these state law protections. The risks extend well beyond access to the products themselves. Increasingly, the evidence suggests that a relatively small number of sophisticated traders on production markets proper from a much larger number of casual sports bettors.
▶ 0:55:50Ms. Sridharan: Professional traders themselves acknowledge that these markets are attractive because they can capitalize on optimism, overconfidence, and other predictable cognitive biases among participants wagering for entertainment, rather than for investment.
▶ 0:56:05Ms. Sridharan: For generations, the distinctions between markets that attract speculation and markets founded on speculation has guided the allocation of regulatory authority between the federal government, which regulates traditional financial markets, and the states, which regulate gambling. I believe it remains the right division today. But congress may ultimately conclude that a federal rule is appropriate.
▶ 0:56:31Ms. Sridharan: If it does, and it must do so very clearly, I urge it to build upon and not replace the knowledge the states have accumulated over decades of regulating gambling. States have developed a deep expertise in licensing, consumer protection, responsible gaming, integrity monitoring, enforcement, and protecting vulnerable populations. Those are precisely the issues prediction markets now present.
▶ 0:56:59Ms. Sridharan: Any federal solution should give due regard to the states' expertise on the matter. I thank you for the opportunity to discuss this.
▶ 0:57:08Chair Murkowski: Thank you. To our colleagues that just came in, we heard the tribal perspective and from the indian gaming association, ncai, and the national tribal gaming commissioners, the solicitor general has just given us the states' perspective. Our final person here on the schedule this afternoon is Dr.
▶ 0:57:30Chair Murkowski: Harry levant, the of gambling policy at the public health advocacy institute to talk about human side.
▶ 0:57:41Dr. Levant: I've tabled my remarks, I will get is dangerously close to back on schedule for you. [laughter] that doesn't mean that anyone on prediction markets should be posting an under right now. My one gambling joke of the day. My name is harry levant and on the director of gambling policy at the public health advocacy institute.
▶ 0:58:06Dr. Levant: I am also in a gambling treatment recovery group, and a gambling addict. Made my last bet on april 27, 2014. Survived a suicide attempt that same night related to my gambling addiction. I hurt a lot of people in my gambling addiction. On every 13, 2015,--february 13, 2015, I stood in the courtroom in pennsylvania.
▶ 0:58:35Dr. Levant: Wasn't that unusual for me, I've been practicing law for 23 years. 202i remembered fondly. The last obliterated in what I can only describe as the haze of a gambling addiction. I stood in that courtroom not as a lawyer, but as a disbarred lawyer and defended -- defendant.
▶ 0:58:55Dr. Levant: On that date, in the presence of clients I devastatingly hurt, the court I betrayed, and in the presence of my three young children with tears streaming down their faces, I pled guilty to 13 financial felonies related to my misappropriation of funds in the grips of gambling addiction. I'm supposed to use the word "disorder." disorder is too easy sounding award.
▶ 0:59:20Dr. Levant: We have a disorder when the microwave stops eating the vegetables--heating the vegetables quickly enough. Addiction is ugly and devastating and painful for each person who struggles. I have the privilege of being here today for a fundamental reason. Something I can guarantee everyone in this room will agree with, or needs to look in the mirror if you don't. Prevention of harm is the single best form of treatment.
▶ 0:59:50Dr. Levant: Single best form of treatment. On that day of my guilty plea, as I was being sentence for my felonies, I made a pledge. The pledge I made to the court and in the presence of my children was if I could get well, I would dedicate my future to helping prevent others, particularly younger adults, from suffering a similar fate. I made my first bet when I was 15 years old. And the keyword was the word "prevent." I am not a prohibitionist.
▶ 1:00:22Dr. Levant: I will make the under senator cortez masto and distinct members of tribal nation happy. I am in favor of a properly regulated legalization of sports gambling. But what we have today is far from that. The two questions I get asked the most often come when I made that vow, I was going to help prevent other people from suffering harm, the two questions I get were if I knew in 2015 what the world would look like on these phone devices 11 years later, what I've been so brazen to make that vow.
▶ 1:00:55Dr. Levant: Secondly, do I think I could get sober today in this world? Whether we are talking about micro betting on traditional apps, or we are talking about prediction markets, online sports betting is a fundamentally different, inherently dangerous, and effectively designed--defectively design product. Let me say it again, defectively designed product.
▶ 1:01:23Dr. Levant: It brings together all of these interests, sports leagues, owners, players, gambling companies, ai companies, now prediction markets. It brings them all together in a collective partnership, where they all want to make as much money as possible. It is the equivalent of grandmom's thanksgiving apple pie. The end of thanksgiving night, we say give me a little piece of pie. Uh-uh, we want as big a piece of pie as we can get.
▶ 1:01:53Dr. Levant: The same thing is true with all of the entities involved in delivering micro betting and prediction market acrobatic. They want as big a piece of pie as they can get their hands on. The problem is it's a magical pie. It only has one ingredient. That ingredient is how much they can get the american people to lose, and how quickly can they get them to do it. Micro betting, draftkings, fanduel, mgm, is devastating, but that is for another hearing.
▶ 1:02:24Dr. Levant: Prediction markets take us to a whole new level. In closing, before we turn to questions, be there any doubt of weather prediction markets sports contracts gambling, I go to the opening comments of the chair and vice chair. Each of you -- I wrote it down -- use the word "bet." we are not talking about just kalshi and polymarket.
▶ 1:02:48Dr. Levant: This is draftkings's ad I clip today offering betting in all 50 states, including alaska and hawaii, that have not yet legalized this. And our good friends at fanduel with the exact same thing, proclaiming and offering to people as young as 18 years old, gambling in all 50 states.
▶ 1:03:13Dr. Levant: I have had in the last three months six clients in my recovery group be turned -- return to gambling on prediction markets. Why? Because they thought they were making investments. Our article three courts are going to decide a lot of legal issues. In the meantime, this distinguished body, congress, has the plenary authority to act.
▶ 1:03:39Dr. Levant: I will continue to come before each committee that will have me to talk about the need for minimum federal safety standards. States can go further under the 10th amendment, but I am here today with real-life ideas to help you and will come back each time you ask, because there are ways to make this safer. And I joined with the distinguished leaders of tribal nation, I pledge to continue working with you and others to make this safer. I'm not a prohibitionist. But we have a mental health crisis on our hands. Thank you for the time.
▶ 1:04:11Chair Murkowski: [inaudible] we have a lot of members here, and I want to make sure that we have an opportunity to weigh in with those who we have invited. I'm going to ask a really quick question, and I think this is probably directed to you, vice chairman hill, because senator schatz has mentioned it, I mentioned it in my comments come it was mentioned by several of our tribal leaders here, the
▶ 1:04:42Chair Murkowski: Impact of that prediction markets pose to tribal and other gaming operations in terms of the revenues that then come and support in so many, many different ways. Does iga have the research on the impact of prediction markets on the tribal gaming revenues? It's important around here for people to understand what are we really talking about.
▶ 1:05:09Chair Murkowski: I am not only the chairman of this indian affairs committee, but I'm chair of the interior appropriations committee. Believe you me, if we have to figure out where in our interior appropriations we are going to backfill the losses that come if prediction markets truly do take over, do we have that data? Can we do a better job in collecting and analyzing it and sharing it?
▶ 1:05:36Mr. Hill: Yes, thank you, madam chair, for the question. Currently iga is working on analyzing national data and the impacts of production markets, tribal sports gambling. The data is proprietary -- proprietary, say that word right -- proprietary, and to obtain it, we would have to have the tribes give us the data.
▶ 1:06:01Chair Murkowski: Is that something you think there was a willingness to share because of the impact?
▶ 1:06:07Mr. Hill: Yeah, I definitely think so. In the state of wisconsin the tribes in the state are working together to analyze the sportsbook market for the state of wisconsin. Again, getting those verifiable numbers and analysis for the tribes and the state to work off of. So there is definitely forward movement. We are actually expecting phase one of that report due in about 10 or 15 days.
▶ 1:06:34Chair Murkowski: I think it is really important to get that. Senator schatz?
▶ 1:06:38Sen. Schatz: I'm going to try to do this quick because we have so many people. I will try not to chew up five minutes. Quick question, one sentence if possible, free to agree with each other. What is the one thing we should be doing in the short run?
▶ 1:06:55Mr. Hill: I think the amendments to the clarity act would be step one. Or moving forward with the senate bill that production markets are sports betting.
▶ 1:07:13Mr. Macarro: Enforcing existing law. The cea itself prohibits gaming. Go from there. Also, fill out the commission. It is really an abomination that it's an upside down regulatory agency to have one commissioner when there are four vacancies.
▶ 1:07:43Mr. Macarro: >> I would echo that, the need to have a solid regulatory framework and what is intended by the laws versus how they are being interpreted and applied. If we were able to get some clarity, no pun intended, on that issue, that would be a great benefit.
▶ 1:07:59Ms. Sridharan: Agreed with that, legislate, and legislate in a way that makes clear that poorly-fit financial derivatives lodges not preempt state and tribal law in the way that it is being litigated across the country.
▶ 1:08:16Dr. Levant: Emphasis on short-term what you can do, bring the sports league commissioners and, place them under oath, get to the bottom of why they are selling their data for gambling purposes on prediction markets. The new york mets entered into a multibillion dollar contract with a brand-new prediction market yesterday. You could have hearings today. Things would change.
▶ 1:08:41Chair Murkowski: Senator smith?
▶ 1:08:44Sen. Smith: Thank you so much. I really appreciate this. I serve on this committee and the agriculture committee. Chair boozman can vouch for how I have asked many of these questions of the commodities futures trading commission as well as we figure out how it is that we have this sort of just rapid expansion of prediction markets incomplete contravention to igra and the state tribal
▶ 1:09:15Sen. Smith: Compacts and tribal sovereignty. Your points are so well taken. Two quick things. I think I saw data -- appreciate what senator murkowski was asking -- I think I saw data from the american gaming association, which said they estimated it was roughly a billion dollars in state and tribal revenue that has been lost. I don't know if anybody wants to comment on that. I don't know how they gather that information. But just to give us a sense of scope of what we are talking about in terms of lost revenue.
▶ 1:09:43Sen. Smith: I don't want to put you on the spot, Mr. hill, because I know you don't know where that data came from, either, but how does that sound to you?
▶ 1:09:50Mr. Hill: I think that's important information, but also looking at the numbers we are able to report on about the report that tribal gaming expanded 4%, 5%, 2024 to 2025, but then you look at the totals from the prediction markets over 2000% growth from one year over the next.
▶ 1:10:13Mr. Hill: That is really very expensive numbers, being able to -- that definitely has to have an effect on legal gambling in all the states where it is allowed.
▶ 1:10:26Sen. Smith: Thank you.
▶ 1:10:27Mr. Macarro: The quickest answer I can give is in california alone we think there is at least a 5% revenue hit, I suppose the best way to say that. It is based on aga's numbers. This is a qualified answer.
▶ 1:10:45Mr. Macarro: I wanted to ask if the record for this roundtable would be open, if there is a record, open subsequent to this, we would like to get better metrics in so that we will underscore the receipts from what I just said. All right, thank you.
▶ 1:10:59Sen. Smith: That's great. Quickly following up on what senator schatz was asking about, we did not make sense to have an amendment to the clarity act or potentially to the farm bill which would just clarify that the cftc does not preempt igra or tribal state compacts or tribal sovereignty, that prediction markets should abide by existing law? Mr.
▶ 1:11:21Sen. Smith: Hummingbird, you laid out I think three things that we would want to accomplish, and it seems that we have potentially moving vehicles that we could use to address these issues, which are urgent, in a timely manner.
▶ 1:11:39Mr. Hummingbird: Sorry, could you repeat the question?
▶ 1:11:43Sen. Smith: You don't even need to answer, I just want to point out to the committee that I do think we have moving vehicles that would just clarify that the commodity futures trading commission -- commodity futures act does not preempt igra or tribal state compacts, and that production markets need to abide by existing law. That seems to be a fairly simple and should be noncontroversial.
▶ 1:12:08Mr. Hummingbird: It should be, I agree with that, senator. Unfortunately, sometimes common sense isn't so common these days. But those are things that should be fairly, in my estimation, fairly easy to address, because there are very clear legislative languages out there that point to what is acceptable versus what is not.
▶ 1:12:33Mr. Hummingbird: If we had the ability to go and clarify to say that, no, as chairman macarro rightfully pointed out, that was not the intent, and for the federal agency to unilaterally decided that it knows the law better than those that passed it is a wrong route to take.
▶ 1:12:53Chair Murkowski: Fortunately we have a commonsense chairman of the agriculture committee who is working on a farm bill. Not a response to senator smith --
▶ 1:13:04Sen. Boozman: No, no, it is really important you are up here. All of us have concerns about underage gambling. And you get into all of this situations of insider trading and this and that. I think I think you have a really good case to make. I don't think enough people understand it here yet.
▶ 1:13:32Sen. Boozman: The remarkable thing about prediction markets is the speed at which they have grown. Nobody envisioned, would you say early 2025? >> 2000% year-over-year growth.
▶ 1:13:50Sen. Boozman: And growing larger. I would consider we should have, get up here and continue to visit with members, build your coalition because you are not alone. There are other people, such as the lady sitting next to me. The senator from nevada. There are lots of people that are concerned about this.
▶ 1:14:17Sen. Boozman: As far as clarity, and sticking it into the farm bill, the problem is you are conflating issues, there are lots of people that are working hard on the farm bill. The farm bill is the farm bill but this doesn't have anything to do with the farm bill. See what I'm saying? It would be like you having an important bill and somebody sticking the farm bill in your bill. So I don't think those things are going to happen.
▶ 1:14:48Sen. Boozman: I think you run into the same problem with clarity in the sense that crypto is not prediction markets. I think you have to build your case. I am very sympathetic and went to help you. But I think that is how you do it. In your testimony today, it was great. It is interesting and you did a good job giving a lot of different insights into this. It's not like everybody is saying the same thing. You did a really good job.
▶ 1:15:20Sen. Boozman: So thank you.
▶ 1:15:21Chair Murkowski: Senator cortez masto?
▶ 1:15:26Sen. Cortez Masto: I want to thank you and I appreciate the chairman being here because this helped me understand as I work on the market structure for clarity, which is to give the cryptocurrency, some sort of market structure and regulation for cryptocurrency. What is your concern that somehow that opens the door for this type of prediction market to continue for cryptocurrency?
▶ 1:15:54Sen. Cortez Masto: Maybe the solicitor, let me have you address that.
▶ 1:15:57Ms. Sridharan: Maybe this connects back to something senator smith asked about. One thing that has been a large part of the fight here is trying to fit these sports betting wagers and prediction markets, or these traits that are happening, into a particular financial instrument that is already being regulated under federal law.
▶ 1:16:22Ms. Sridharan: The commodity exchange act lists a number of instruments and options, futures, and the one that we fighting about is swaps for the most part. I think with respect to I guess first of all clarity, one thing that is critical is clarity in defining an instrument, saying this instrument is this and this instrument is not this.
▶ 1:16:48Ms. Sridharan: One critical thing that could be helpful from the perspective of regulating sports betting as not a financial derivative is to say that this is not one of those instruments. By saying what it is not gives clarity to that. It's not just whether state law is preempted. The first question is, does the commodities exchange act cover this?
▶ 1:17:15Ms. Sridharan: To the extent that further definitions clarify these instruments don't touch on sports wagers or other form of gambling, it would make it less likely to I guess shovel in or tunnel in instruments that don't really belong under federal law.
▶ 1:17:32Sen. Cortez Masto: If we don't address this issue in the clarity act, but for instance we pass the prediction markets or gambling act and outlaw it everywhere else but it is allowed in this legislation, crypto and on the block chain, there is a world where in crypto and the block chain, prediction markets could exist and still do sports wagering in gambling and casino style gambling, correct I think that's right but with one
▶ 1:18:04Sen. Cortez Masto: Caveat. Cryptocurrency might fall into other forms of regulation under federal law including the securities exchange act. We have to be careful about whether they fall under the commodities exchange act umbrella or some other federal law. To the extent that I'm comfortable speaking about the commodities exchange act because that is where the prediction market litigation has been, it's harder to know what would happen with cryptocurrency without fully examining the scope of other federal law.
▶ 1:18:32Sen. Cortez Masto: So we are looking for a new market and should not allow this type of gaming, prediction markets, in the way they are trying to do now?
▶ 1:18:44Ms. Sridharan: I think that would be helpful.
▶ 1:18:48Sen. Cortez Masto: Anyone else?
▶ 1:18:52Dr. Levant: Prediction markets are not new. This type of action is. New. As it relates. To preemption, I think the missing link is this hasn't been declared gambling. If this was declared gambling prediction markets wouldn't be able to say we are under the purview of the ftc. That is the easiest thing to get a majority view on, this is gambling. Once you do that, other things fall into place.
▶ 1:19:24Dr. Levant: Senator, in response to your concerns about crypto, I agree with the solicitor general because you would be down to some very narrow issues and you could put a lot of friction in those issues. Could it still exist in some world? Yes. With that world be the mental or public health threat it is today? No.
▶ 1:19:43Sen. Cortez Masto: A final point, this issue we are talking about right now is working its way through the courts. Some of the courts in nevada,, she is temporarily -- kalshi is temporarily banned because a judge found its event contracts from tradition -- indistinguishable from traditional sports betting. It's a state of flux.
▶ 1:20:06Sen. Cortez Masto: The goal here and from what I'm hearing from you, is to figure out how we preserve the states rights, federal indian gaming rights to regulate this. They have traditionally done sports betting and casino style gaming. Is that correct?
▶ 1:20:24Dr. Levant: I would take it a step further. There needs to be minimal federal safety. You can't just pass this and have a patchwork of 50 states. There has to be minimum federal safety standards under the plenary authority of congress whether we are talking sports contracts under prediction markets or more traditional same game parlays on draft kings. There is an overwhelming, innate years since murphy this is out of control.
▶ 1:20:51Dr. Levant: We should all agree that we need minimum federal safety standards and governance for all of this.
▶ 1:20:57Sen. Cortez Masto: One final question and this is the distinction I think, what rules and regulations to tribal regulated sports books have to follow that kalshi and other prediction markets do not? What I mean by that is, I know traditionally there has been protection issues that many have to follow to guard against. There is specific -- suspicious betting activity, money laundering, those types of things.
▶ 1:21:26Sen. Cortez Masto: What is the difference between indian gaming and what kalshi does?
▶ 1:21:34Mr. Hummingbird: The tribal gaming regulators operate a multilevel, multitiered system. We have a number of regulations not only from the federal government but also through the tribal state compacts that we are obligated to make sure they are implemented effectively.
▶ 1:21:53Mr. Hummingbird: Anti-money laundering is a big piece and a good example to use in the situation, because as we stand right now, there are no requirements for prediction markets to produce any type of effort to go towards and identify the individuals that are placing their prediction market or purchasing contracts or swaps.
▶ 1:22:23Sen. Cortez Masto: And age restrictions as well?
▶ 1:22:24Mr. Hummingbird: We have age restrictions. I firsthand know there are individuals in my state of oklahoma that, we have individuals that are able, as young as 15 to go out and create an account using their own debit card that they have from mom or dad and wager on baseball. I have it happen. -- I have seen it happen.
▶ 1:22:50Mr. Hummingbird: We have known customer restrictions for processing financial transactions. We have to have a face to go along with this. And only do we have the money laundering issues here, but there is also other illicit activities that could follow with that.
▶ 1:23:03Sen. Cortez Masto: If a gaming, indian gaming facility were to run afoul of this and violate the regulations, is it possible you could lose your license? And individual casino could lose its license altogether, correct?
▶ 1:23:18Mr. Hummingbird: If there were a violation and the regulators weren't able to correct that, it could have negative repercussions.
▶ 1:23:28Sen. Cortez Masto: If a company like kalshi run afoul of this, what happens? What is the repercussions?
▶ 1:23:33Mr. Hummingbird: There is none.
▶ 1:23:36Sen. Cortez Masto: Thank you.
▶ 1:23:38Chair Murkowski: Senator? >> my questions will go along the same lines as senator cortez masto. There are two things, the health issue, which you raise, Dr. levant. You are suggesting that needs to be a federal level issue. Then there is the economic issue that would affect states like oklahoma that have trouble gaming is a big part of the economy.
▶ 1:24:10Chair Murkowski: I will start with the health piece of this first. Are you suggesting the same health standards would apply to this as would apply to indian gaming, and how does that work? That doesn't connect for me. >> I think it is both. I think the role of congress is to create minimum federal safety standards governing gambling. The courts will sort out whether sports contracts are gambling or not. They are but.
▶ 1:24:43Chair Murkowski: We should all in this new world of online gambling, be able to have minimum federal safety standards. I look forward to working with tribal leaders to, tribal leaders have decades of experience working with government regulators. I would think reasonable minds would come together and say, you know what? Nobody wins in this. Everybody wins. Let's come up with safety standards and then turn to the states and the tribal nations to go further if they want.
▶ 1:25:09Chair Murkowski: Right now, it is truly, because of the world of online gambling, the wild west. That is where congress comes in with minimum standards, and then respects the 10th amendment for states to go further if they would like. >> german hummingbird, would you say -- chairman hummingbird, how would you see federal standards being implemented in igra?
▶ 1:25:32Mr. Hummingbird: The federal safety standards we have? >> the safety standards we would impose on betting, how would you see those applying equally and enforced in the same way?
▶ 1:25:46Mr. Hummingbird: If there are federal regulations, safeguards for this, at present there are not. From the cftc, nothing remotely approaches what we have been indian gaming. We have state compacts.
▶ 1:26:08Mr. Hummingbird: In order for them to offer something we feel is equally covered under our existing frameworks, are existing tribal state compacts, we would expect cftc and the operators in prediction market realm to follow as robust of regulatory schemes as we have. Right now, there is no indication that that is the intent. >> thank you.
▶ 1:26:33Mr. Hummingbird: On the tribal economic side, I think chair murkowski s this already but I wanted to dig in a little bit. Because in oklahoma, the sports book has been an issue in play for a long time in terms of state versus tribes.
▶ 1:26:54Mr. Hummingbird: I'm curious how you think, I will you have been measuring the impact of online betting, including sports betting and including the prediction markets, and how big of an impact you think it has had on oklahoma tribes.
▶ 1:27:13Mr. Hummingbird: I would say at this point it might be a little early to comment on that. Since this is still, it has been a growing industry. As the chairman pointed out, this has grown exponentially over the last year. So the real ability for us to measure the actual financial impact will not be known to us probably for a little more time.
▶ 1:27:43Mr. Hummingbird: Say, however, just by the numbers that have been voluntarily reported or at least estimates from our fellow economists, that there are hundreds of millions to billions of dollars that have been removed from legal betting avenues, whether that is through the states or the tribes.
▶ 1:28:03Mr. Hummingbird: If we were to use that as a measuring stick I would say you are looking at a significant reduction in the amount of funds that have been available through legal sports betting, and have been processed through these unregulated markets. >> and maybe at a high level, what has been the trend of indian gaming revenues through this period, as we have seen this growth in prediction markets?
▶ 1:28:36Mr. Hummingbird: We are aware the gaming commission --
▶ 1:28:42Mr. Macarro: We are aware the gaming commission publishes an aggregate. The report indicates another year of record level revenue reduction. -- production. There needs to be caution when you interpret what that means. The and igc aggregate report gets the causality backwards.
▶ 1:29:07Mr. Macarro: The growth you need to take into account that it reflects more tribes opening gaming operations for the first time last year in that reporting period. That has been the case in every reporting year. Every year, another few, or several dozen, the number varies, more gaming operations open up from year to year. So the overall aggregate number doesn't necessarily reflect existing operations that are doing better.
▶ 1:29:35Mr. Macarro: What would be a truer number would be to compare same facility year-over-year performance, and we think that would present a different picture if that were to be done. Aggregate growth from new entrants doesn't tell us anything meaningful about where prediction markets are eroding customer base of facilities that are already operating.
▶ 1:29:56Mr. Macarro: I can tell and an individual basis, tribal property by tribal property, I'm fairly certain we track revenue in similar fashion. For instance this particular week in august, the first week of august, I know our tribal gaming facility knows what revenue was generated on this day, what is today?
▶ 1:30:21Mr. Macarro: Tuesday, on this day last year for the first week of august and the year before that and the year before that. We can compare week to week like that of her different years, month-to-month and year-by-year. Instance, there was a time during covid, during the pandemic when all our facilities were shut down for two and a half come almost three months and during that time, card clubs opened up and we could see what their operations were like.
▶ 1:30:50Mr. Macarro: There was a time when we opened back up during the pandemic and they were closed, and we could see the delta between the two. We knew what the impact was. We are seeing that now. We don't have those qualifications or metrics ready to hand over yet, which is why I asked about the open record, how long the record would be open for this but we see those impacts, because revenue is tracked daily, weekly, locally and compared.
▶ 1:31:19Mr. Macarro: So we can look immediately pre-test, where prediction markets started to operate in california, and sports betting is illegal in california so with the onset of growth during that time period, we see how that tracks with revenue and production and we know property by property, there are over 55 in california, those are the reports that we are all seeing. >> I wanted to add --
▶ 1:31:47Chair Murkowski: I will interrupt and be very rude because I have a 5:15 zoom and I will zoom off to the alaska native health board. This is actually going to be one of the issues I raise with them. We were talking about mental health and how we deal with things that are evolving very fast but we are not concluding this. This is a roundtable so I'm not gaveling out. The record will be part of our committee roundtable.
▶ 1:32:15Chair Murkowski: Senator lujan, I want you to have a chance to ask follow-up send additional questions members may have or final comments. This is kind of like, everybody's dream, the chairman and the vice chairman leave the room and the microphones are still on. But I think this speaks to the degree of interest, the challenge that we have in front of us.
▶ 1:32:44Chair Murkowski: It is moving so fast, the impact is so great, and we don't have all of the data that we need now. So getting this information is greatly appreciated. I truly appreciate the interest from so many members. I will scootch out of here. Staff will keep us honest in terms of when we turn out the lights but thank you. >> thank you, senator. Go ahead.
▶ 1:33:18Chair Murkowski: >> thank you for being here today. And everyone that has been here and all of the staff that are here as well. I wanted to follow up with one of the questions that was asked by senator smith of minnesota about the points -- that points back to the correspondence the gaming association sent to every senator. It provides two bullet points in here.
▶ 1:33:46Chair Murkowski: Number one and number two, about language that is being more than recommended, advocated for, to address the issue that we are talking about here. I want to zero in on the second one, the second bullet which states that language should make clear that the decentralized finance cannot be used to evade, override, or preempt state, tribal or federal gambling laws.
▶ 1:34:19Chair Murkowski: The d5 section of the bill released from the agricultural committee creates an exemption. That exemption, without this language, will create a loophole. Is that the right way to interpret that? >> I believe so. >> I don't think it was anyone's intention to create a loophole for prediction markets.
▶ 1:34:48Chair Murkowski: I haven't heard that yet, in all the meetings I have been in, conversations and all of the rest. And if in fact, the intent of the exemption and the d5 section, is not to create a loophole for prediction markets, then this language just says there is no gaming, there is no gambling. There is no prediction market in that space. Is that fair, Mr. chairman? >> yes.
▶ 1:35:16Chair Murkowski: >> there are lots of smart lawyers in this room. I am not a lawyer. But I think that doesn't address the first bullet but if in fact the language that was included in the d5 section of the ag bill is the language that if it is not addressed, creates a loophole for prediction markets and gambling everywhere, all kinds of gambling, not just prediction market gambling, video slots, video this and that, it is all allowed.
▶ 1:35:47Chair Murkowski: Everywhere. Kalshi, and what is the other one? Polymarket. They are in the block chain. They are not here yet and I will emphasize yet because if there is a loophole that they can exploit, one-out role in this space? -- why not roll in this space?
▶ 1:36:09Chair Murkowski: Did I describe the second bullet in my simple understanding of what your correspondence was to assess senators?
▶ 1:36:19Mr. Hill: That is correct. Looking at those, looking at polymarket as doing this I'm sure right now, the clarity act brings it into the united states as you mentioned. So that is creating the loophole again these markets to move into another form, and further unregulated area that raises very broad concerns from the tribes across the country.
▶ 1:36:49Mr. Hill: >> so if the language that creates the loophole is in this legislation, this should fit? I would ask the lawyers in the room as well. You can get back to me on that as well. But that doesn't address number one. I think with the recommendation to run bullet number one, that is the shift, the language as I understand if that is being advocated for.
▶ 1:37:19Mr. Hill: Mr. chairman, did you have a response?
▶ 1:37:20Mr. Macarro: I agree. I wanted to touch on a broader point, if you are done. >> please.
▶ 1:37:30Mr. Macarro: The clarity act represents the most significant expansion of the cea since dodd frank, significant expansion. The question is why would congress support expanding the cftc's jurisdiction into this clarity act space? Like chains and crypto, why would it support doing that?
▶ 1:37:58Mr. Macarro: Expanding authority, jurisdiction, at a time when they are violating state laws, igra is being violated, they are actively suing states and revising long-standing regulations to primarily allow for unregulated gaming?
▶ 1:38:17Mr. Macarro: Unregulated national gambling under the banner of the cftc, which has only one of five commissioners and four vacancies and what commission could actually provide adequate oversight even if there were rules there? The cftc is under a condition of regulatory capture right now. It is a farce. So it is puzzling that congress would support the expansion of the cftc jurisdiction and authority under these conditions.
▶ 1:38:48Mr. Macarro: There needs to be a reset, where until the law actually changes, and the law is enforced, conditions are right for an expansion of authority and jurisdiction. Until then, it doesn't make sense, it doesn't make logical sense, which is in short supply as michael panelist said earlier, to do so and move forward in this manner.
▶ 1:39:09Mr. Macarro: >> the way it has been described to me, the words I read, another way to describe it is with spot market limitation and I think people in the room that worked on legislation know what I'm referring to. That is something myself and other colleagues have advocated for, as well.
▶ 1:39:30Mr. Macarro: I very much appreciate the testimony today and I wanted to zero in on reminding us, if language and legislation is what is creating the exemption that could lead to a loophole, that is the place to address it. And I just wanted to make sure I was getting that right. Did you have something?
▶ 1:39:51Dr. Levant: I agree with you, however you mentioned polymarket not being official. Polymarket is the official prediction market partner of major league baseball in the nhl. They are here but there is no enforcement.
▶ 1:40:08Dr. Levant: This is all taking place right in front of our eyes, and you can close the loophole like that, I agree, but as the president points out, if we don't enforce something here, you are legislating and people are thumbing their noses at it. It is taking place at light speed, which is where the mental health and public health crisis comes in. They are just doing what they want to do. That is why I brought these two posters.
▶ 1:40:38Dr. Levant: They are advertising in 11 states that haven't legalized it. They have exercised sovereign jurisdiction to say no. Minnesota. And they all, and the void is of any enforcement. If congress waits for loopholes to get closed for the courts, the crisis is going to grow exponentially. We are talking about people and families and your point is well taken. I will take it one step further because polymarket is here.
▶ 1:41:09Dr. Levant: >> the issue you raise would be addressed by language that is being proposed by two senators, senator curtis and senator schiff. The portion I referred to was narrowing in on language that is included in the d5 section of the ad released legislation that would create a loophole if it would go into effect and I don't believe it was again, the goal of anyone to create a loophole
▶ 1:41:40Dr. Levant: That would allow prediction markets, spot markets, to also ride in that exemption language that was created for other reasons. Last thing and I will yield back. Yes?
▶ 1:41:52Mr. Hummingbird: I think you are on point with this. If we don't have the ability to really point to some definitive language that speaks to what is intended, and it needs to be clear what was intended so it can be applied equally as clearly, but if we don't have the ability to say what was intended, what we have right now, for lack of a better term, is a relatively quote unquote small problem. The prediction markets will be around.
▶ 1:42:22Mr. Hummingbird: They have been gaining steam over the last year. If we don't address these issues today,, in whatever form, whether it is putting the onus upon cftc or restriction of whatever form it takes, something has to be done because if we don't we are on a slippery slope.
▶ 1:42:40Mr. Hummingbird: Particularly when it comes to things like the crypto area because what you are going to see right now, you have 10 actors within the prediction market arena. There will be more. As we go through this, it isn't necessarily the size that is the problem.
▶ 1:43:01Mr. Hummingbird: It is the underlying issue of whether or not they are going to be allowed, they being the cftc and prediction market operators, will be allowed to operate within this space that they define. If they define that, what is the next step? What is going to be the next thing? There is always going to be annexed thing.
▶ 1:43:20Mr. Hummingbird: If we don't take the action we need to now, to nip this in the bud so to speak, we will be setting ourselves up not just the tribes are the states, but the entire nation as a whole, for a much larger headache than what we can currently deal with. If we deal with it now, I think touching upon the old proverb, an ounce of prevention is worth a pound of cure.
▶ 1:43:46Mr. Hummingbird: We have the ability to administer the ounce of prevention but it must be done quickly. >> let me just respond real quick because it is interesting you brought that up. I asked nathan, the point person on ag regarding this. What we are proposing, why don't you tell, go to the microphone and tell them.
▶ 1:44:18Mr. Hummingbird: This is your chance. Again, this is an important point the senator brings up. >> yes, sir. Thank you. The language we used in the ag portion was passed by host clarity. We think it is limited to spot but we have heard the same.
▶ 1:44:41Mr. Hummingbird: The letter, you have heard your colleagues say it is limited supply so we came up with language that limits it to spot as well. Happy to send that to your staff. I don't speak for leader thune and it is a bit above our heads, but I think all of this is still up for debate. So happy to do that. >> but we very much want to work with you on that. I really hadn't heard of that.
▶ 1:45:09Mr. Hummingbird: But yes, so thank you so much for bringing it up. As always. >> that is all I have. >> I guess let me thank everyone for coming to the working group. We appreciate you for being here. Thank you to my colleagues and we will end the working group section now. >> thank you so much. >> we are adjourning the roundtable. Thank you.