Senator Heinrich, New Mexico Tribes Push to Regulate Prediction Markets
Kalshi one of the biggest companies within Prediction market betting
Prediction markets are drawing fierce opposition from New Mexico lawmakers and Indigenous leaders who warn these unregulated platforms threaten tribal gaming operations. U.S. Senator Martin Heinrich, alongside 16 tribes and pueblos in New Mexico, is calling on Republican senators to restrain online gambling applications. The rapid expansion of these apps, which allow users to bet on sports and engage in casino-style gambling, poses an existential threat to tribal sovereignty by undermining revenue that tribes rely on for government services. Being that sports gambling remains illegal in New Mexico except at tribal casinos in person, these operations fund essential services including education, public safety, healthcare, and housing. The coalition seeks regulatory measures to protect prediction markets New Mexico tribal communities depend on for their economic foundation.
Heinrich and New Mexico Tribes Unite Against Unregulated Prediction Markets
Heinrich sent the letter on Friday to Republican chairmen of the Senate Committees on Banking, Housing, and Urban Affairs and Agriculture, Nutrition, and Forestry. The letter urges both committees to amend pending legislation that deals with digital assets, specifically the CLARITY Act and the Digital Commodity Intermediaries Act. Eleven other Democratic senators joined Heinrich in this effort, including Tina Smith of Minnesota, Maria Cantwell and Patty Murray of Washington, Richard Blumenthal of Connecticut, Mark Kelly of Arizona, Tammy Baldwin of Wisconsin, Alex Padilla and Adam Schiff of California, Jacky Rosen of Nevada, Brian Schatz of Hawaii, and Gary Peters of Michigan.
The coalition backing this action extends beyond elected officials. Sixteen New Mexico tribes and pueblos signed the letter, coupled with support from the Indian Gaming Association and National Congress of American Indians. These tribal governments seek specific amendments prohibiting Commodity Futures Trading Commission-registered entities from listing prediction contracts that resemble sports bets or casino-style gaming products.
This push reflects broader concerns in the Senate about prediction markets. A separate group of 16 Senate Democrats, led by Amy Klobuchar of Minnesota, previously called on the CFTC to tighten regulation of these platforms. Senators warned that event contract trading volume has grown exponentially over the past 18 months.
How Prediction Markets in New Mexico Threaten Tribal Sovereignty
Platforms like Kalshi operate outside the Indian Gaming Regulatory Act framework, which positions them as what Brookings Institution scholar Patrice Kunesh describes as an existential threat to tribal gaming. The conflict centers on jurisdictional authority: prediction markets claim protection under the Commodity Exchange Act and CFTC oversight, arguing their sports event contracts qualify as derivatives rather than gambling subject to IGRA regulations.
Three New Mexico pueblos and one tribe filed suit in May 2026 against Kalshi, with the Mescalero Apache Tribe, Pojoaque Pueblo, Sandia Pueblo, and Isleta Pueblo alleging the platform violates gaming compacts and federal law. The plaintiffs noted Kalshi provides anyone over age 18 access to sports gambling, while New Mexico tribal casinos require patrons to be 21 or older under state compacts and federal law. Consequently, this age disparity removes regulatory guardrails tribes maintain to deter gambling addiction.
Tribal gaming generates more than $40 billion annually, funding healthcare, housing, education and social services in Native American communities. New Mexico tribes reported generating more than $266 million in adjusted net win during the last quarter of 2025. For comparison, Kalshi alone pulled in more than $2.5 billion on sports event contracts in September 2025, coinciding with the NFL season start.
What Legislative Amendments Could Protect Tribal Gaming Rights
The coalition requests two specific amendments to the CLARITY Act. The first would prohibit federally regulated platforms from offering contracts tied to sports or casino-style outcomes. Sports event contracts have been the main source of conflict with state regulators and tribal gaming interests, which argue that the products amount to unlicensed sports wagering.
Tribal leaders contend prediction markets undermine sovereignty by relying on the fiction that sports bets are “swaps,” violating government-to-government agreements tribes have built with their states. The revenues threatened fund healthcare, education, housing, public safety, language preservation, and essential government services.
The second provision would clarify that the CLARITY Act does not override existing tribal, state or federal gaming laws, including IGRA. The bill does not expressly say that it preempts IGRA, but tribes want Congress to eliminate any potential ambiguity before it becomes law. Sports betting qualifies as Class III gaming under IGRA and is permitted if included in a tribal-state compact.
IGA’s concern centers on cryptocurrency-based prediction markets using an expanded federal framework to strengthen arguments that they may offer gambling-like products nationwide without complying with tribal or state gaming laws. Without proposed protections, CLARITY “could unintentionally allow cryptocurrency-based prediction markets to expand online gambling nationwide”.
The campaign expanded in February, when IGA brought together tribal leaders, the National Congress of American Indians, commercial gaming groups and consumer advocates for a congressional briefing. The coalition announced a task force to coordinate legislative, regulatory and legal responses.
