Senate Indian Affairs (Murkowski): Hearings to examine tracking prediction markets' exponential growth, focusing on tribal implications and beyond.

Let's 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 an issue that has generated a fair amount of interest, I would suggest, as I look to my Vice Chairman, interest and concern and kind of a desire to have, if not action, certainly a more open conversation about what we are seeing, within the prediction markets, and more important to that, what it means for tribal entities, the tribal implications and beyond. So here in the committee, we've invited tribal, state, and public health leaders to help us better understand the rapid growth of what we're seeing with prediction markets and what that means for tribal governments, consumers, and communities. I'll be the first one 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. I was looking at them as kind of this novelty thing, and yet 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're raising important questions about the utility and safety of prediction markets and the legal status of the event contracts that are being bought and sold on these platforms. The number and variety of event contracts individuals can buy has exponentially increased.

Individuals can now trade on many different questions, and, you know, it's fascinating.

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's all over the board, and we all know that.

And again, I think we're still in the early stages of this industry, and many of the most important legal questions remain unsettled. Courts across the country are considering currently considering whether sports-related event contracts are a form of gambling. Many tribes and states argue that these sport event contracts amount to sports betting and therefore should be subject to tribal and state gaming laws. Prediction Market Platforms and CFTC, in contrast, take the position that these sports event contracts are swaps, a financial derivative, and therefore a federally regulated financial instrument under the exclusive jurisdiction of the CFTC. CFTC has also recently proposed new rules on prediction markets and the type of events that contracts may or may not make in the public interest.

Senator Schatz and I sent a letter urging the CFTC to conduct formal tribal consultation because this rulemaking is far-reaching and we think it can have significant implications for tribal gaming. This is a concern to us in this committee. 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, and revive tribal cultural practices and languages, as well as funding payments and donations to state and local governments. But the benefits that are spread, I think, are well recognized. FY 2025, 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. So I think it speaks to the point about disruption to the gaming industry and the consequences that would go far beyond casino operations. It could affect tribal governments, families, and rural areas at a time when many are already dealing with increased prices and constrained economic growth. So what's 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.

So we're happy this afternoon to have participants around the table who will share their views from tribal, state, and public health perspectives. So, thank others that are part of the committee as well as Senator Bozeman, we welcome you to the Indian Affairs Committee room for this important and timely conversation. Vice Chair Schatz. Thank you, Chair Murkowski, and thank you to all of the testifiers and for everyone in this packed house. I've met with many of you over the last several weeks and heard about the impacts of unregulated trading on prediction markets on your gaming enterprises, and I want to quote a federal judge in the Ninth Circuit on pending litigation: "It looks like gambling to me." And, you know, a lot of us are so hyper-educated and hyper-technical 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.

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 through 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 in the price of fertilizer or corn or any other input. It is a workaround of both federal gaming law, generally speaking, and the Indian gaming Regulatory Act. And so I'm very 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 threatens to essentially 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.

And so, we work really hard on the Indian Affairs Committee And then in the appropriations side, on the IHS budget, the BIE budget, the BIA budget, and so on. And what is about to happen to Indian Country's revenue pales in comparison to anything that we could do to replace it. And so we all have to have a kind of family conversation about how we're gonna sort out the various opportunities to gamble. I should say game, I know that's a, sorry, Catherine, I should say game and not gamble.

I like gambling, personally. Yeah. But this is a very serious moment, and I really applaud both Chair of the Indian Affairs Committee and the Chair of the Agriculture Committee for being here to take this very seriously, and I look forward to the conversation.

Great. We do have colleagues that are here. I'd love to give everyone a second to make a statement if you'd like, or we can just go to our witnesses, but happy to open it up. Thank you so much, Chair Murkowski. I'm really excited and interested in this conversation.

Don't need to make an opening statement. Appreciate the chance for us to hear from everybody. Thank you. Senator Boozman?

Likewise. I just want to thank you two for having this. This is something that's really, really important, and I'm very, very anxious to hear what our distinguished panel says. Thank you. Excellent.

Senator from the gaming state of Nevada. The gaming state of Nevada. Thank you. Listen, I appreciate this conversation. It is important.

And this is an area that I have also been hearing from our tribes, from gaming hotels and casinos, gaming properties across the country, and labor, that at the end of the day, when we're talking about these prediction markets, A majority of them are actively engaged in sports gaming or casino-style gaming. And I think what I've heard from the tribes and the gaming community across the country is that it's not that they don't— it's not that they want to outlaw them altogether. It's that they want to preserve their right to regulate in their space. And we will find out today. The tribes have regulated this in their space.

All right, the Indian law has given you the ability to regulate it. So the states have traditionally, like Nevada and many, have had the opportunity to regulate that. That's all they're looking for, because right now we have a federal government, the CFTC, that wants to take that away. And that, I, that is what I am hearing from so many. We will hear the repercussions why they want to preserve, to regulate it.

But I appreciate, appreciate this conversation because there's more, more to this conversation that I think many of us need to hear. Thank you. We'll now turn to those we've 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. But I'm just going to ask you to start off as the Vice Chairman of the Indian Gaming Association, the Honorable Tehassi Hill. All right. Good afternoon.

Thank you. As mentioned, my name is Tehassi Hill. I'm honored to serve as Vice Chairman of the Indian Gaming Association and also Chairman of the Oneida Nation. Up front, I want to make it clear that Indian Country is rural America. We are farmers and growers.

We support responsible innovation and the use of futures to hedge risks and ensure fair pricing. However, 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 view this issue from a governmental lens, So I'd like to share some historical context. In the 1970s, tribes turned to gaming as a tool to generate revenue for basic programs and services for our citizens. This was the same time that dozens of states' governments started their lotteries to generate revenue for their citizens.

Every dollar generated by Indian gaming goes to fund healthcare and education for our children, housing for our elderly and public safety and infrastructure. Indian gaming also generates jobs. In 2025, we delivered more than 682,000 jobs for rural American families. 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've worked under IGRA 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 6,000 regulators to oversee our operations. Every tribe engaged in gaming maintains strict age requirements. We invest in 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 have invented nothing.

Prediction markets offer bets identical to those legal regulated sportsbooks: moneylines, totals, parlays, prop bets. The only difference is the prediction markets avoid our regulatory systems to protect consumers and the integrity of American sports. Another big difference is that they ignore strict age requirements and problem gambling programs that we've established. Prediction markets target young people and those in jurisdictions where sports betting is prohibited. They advertise on TikTok and hire influencers who claim they are a side hustle without revealing the risks of gambling.

In fact, the CEO attempted to equate sports contracts to financial literacy. This is misleading and dangerous. Literacy. Today, thanks to one person, agency, every teenager with a smartphone can now lose their shirt without leaving their house or their dorm room. We're only starting to see the devastating impacts of our kids' mental health and their finances.

No one voted for this. Congress did not pass a law. This is happening because one person has declared 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.

We are proud to work alongside some of the organizations represented here today: the National Congress of American Indians, the National Tribal Gaming Commission and Regulators. And we're glad to be joined by labor and more than 1 million casino workers throughout the United States who are fighting to protect good-paying American jobs. And finally, tribal gaming is aligned with 44 state attorney generals who have filed legal briefs in federal and state courts and comments to the CFTC, including the state of Ohio, who is represented here today. The list includes the state attorney generals from nearly every member of this committee. They're fighting to enforce laws of their states, your states.

Some of these laws prohibit all forms of gambling. Some prohibit online gaming, and some rely on revenue from gaming to support their communities. In closing, I leave you with 3 requests. One, we urge you to advance S.4160, Prediction Markets Are Gambling Act. Two, we ask that you ensure the Clarity Act stops all sports and casino gambling through prediction markets and provides IGRA, and state and tribal gambling laws are full force and effect.

And 3, we urge you to stop the outrageous CFTC rule proposed that constitutes the height of regulatory agency capture. Again, thank you for this opportunity, and we look forward to this discussion. Thank you very much. And we will now turn to the President of NCAI, Mark McCarroll. Welcome, Mark, Chairman, President.

Thank you, Chairman Murkowski, Ranking Member Schatz, and the other distinguished members of this committee for holding this roundtable on prediction markets. My name is Mark Makaro, and I am the President of NCAI, the National Congress of American Indians, and also the Tribal Chairman for the Pechanga Band of Indians in California. And today I want to raise 3 primary points. The first is the regulatory framework of the Indian Gaming Regulatory Act, that it must be respected Congressional intent was clear when the Act was promulgated, that Congress never intended the Commodity Exchange Act to preempt IGRA, the Indian Gaming Regulatory Act. When Congress passed IGRA, it was unambiguous.

Tribes hold exclusive jurisdiction over gaming on Indian lands, operating within a framework built through the decades of negotiation among tribes, states, and the federal government. And so for over 30 years, that framework has worked. Tribes and states have negotiated compacts that protect consumers, ensure regulatory accountability, and affirm and strengthen tribal sovereignty. This framework, however, did not happen by accident. It was built deliberately through hard-won negotiation and sustained efforts.

But watching a fundamental— fundamentally distinct federal agency step into this space without authority, without consultation, and without regard for the existing framework is deeply troubling. It usurps all the infrastructure for successful tribal gaming. Today, prediction markets are being used to offer sports and event betting entirely outside the framework Congress created for Indian gaming, thereby undercutting tribal nations' status as sovereign regulators in this space. By relying on commodities and derivatives law instead of gaming law, operators are attempting to sidestep tribal-state compacts and IGRA altogether. This sets up a dangerous precedent where federal agencies could bypass congressionally affirmed tribal rights whenever it's convenient, provided that they dress the workaround in unfamiliar legal language.

So, make no mistake, nothing in the legislative history of the CEA suggests that Congress ever intended the CFTC to become a backdoor regulator of gaming. The 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, then the Senate Agricultural Committee— the chair of the Ag Committee, uh, and an author of the Dodd-Frank Derivatives Amendment, engaged in a colloquy with Senator Dianne Feinstein, making this point explicitly. Senator Feinstein emphasized the importance of restoring the CFTC's authority to stop trading that runs contrary to the public interest, warning that derivatives traders— and traders had already wagered billions on contracts serving no legitimate commercial purpose.

Senator Lincoln, however, went further, stating plainly that the CFTC needed the power to prevent derivatives contracts that exist predominantly to enable gambling through so-called event contracts. Senator Lincoln specifically warned that 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. And I'll just add that this year's Super Bowl in San Francisco, one of these prediction market operators, Caushik, wagered Well, there were over $1.5 billion that were wagered on the Super Bowl through Cauchy's platform alone. So, just a couple of weeks ago, we heard from Senator Christopher Dodd, the author of the Dodd-Frank Act, who stated that when Congress passed the act, lawmakers were well aware of existing federal and state gaming laws and, quote, "had no intention of amending those laws to turn the CFTC into a national gambling regulator." So, this is not ambiguous legislative history. This is Congress, on the record, warning exactly against what we are seeing play out today.

Fundamentally, the CFTC's claim of authority to regulate prediction markets represents a sweeping federal overreach that threatens tribal and state sovereignty and a separation of powers issue, where an executive branch agency defies statutory authority and congressional intent So NCAI calls on the United States Congress to exercise its constitutional prerogative and end the prohibited gaming under this captured agency. The second issue is revenue that's generated from tribal gaming operations and that funds critical services for tribal and non-tribal members alike. And CFTC-regulated event contracts that mimic casino-style gaming threaten this vital source of support. So tribal gaming— tribal gaming revenue is not simply a matter of tribal enterprise. It is the financial backbone of essential services in Indian Country.

And this revenue funds healthcare, education, housing, infrastructure, public safety, and countless other programs that tribal communities depend on every day. When that revenue is diverted, so too is the ability of tribal governments to meet their responsibilities to serve their citizens. Put it this way: every dollar wagered on unregulated gaming, like illegal prediction markets, is a dollar pulled away from tribal jobs, tribal facilities, and tribal community programs. These event contracts are not a neutral alternative. They compete directly with regulated tribal gaming for 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's at stake is significant. Tribal gaming supports hundreds of thousands of jobs in the United States, and a majority of which are in rural America, and generates billions of dollars in annual economic activity, activity that could be steadily eroded and— as an unregulated events contract market siphons off this revenue, the tribal revenue.

Tribal gaming revenue doesn't just support tribal communities. It funds critical services for non-Natives as well. And allowing the CFTC-regulated event contracts to encroach on this space does not just threaten tribal sovereignty and self-sufficiency. It threatens a funding stream that benefits state and local economies throughout the nation. Remember, tribal nations are stakeholders in tribal gaming.

We are not shareholders. Third, the CFTC must engage in meaningful consultation with tribal nations. Consultation is not a courtesy. 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 Indian policy. And yet, the CFTC is advancing prediction markets— prediction market products that function like gaming without ever sitting down with the tribes whose economies and legal rights are directly in the crosshairs.

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. So this failure is especially glaring given the stakes. We are not abstract policy questions. These— 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 at revenue streams that fund the schools and the clinics and the housing that our people rely on. When a federal agency's actions carry that kind of weight for tribal communities, The duty to consult is not optional.

It's fundamental. So, we implore the CFTC to sit down with tribal leaders before you act, not after. Respect 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 a policy decision. You're making a decision about our future, and we have every right to be in the room when that decision is made, the right to transparency, of due notice, and good faith engagement, none of which we've seen to this point.

We otherwise are being denied free, prior, and informed consent. I'll stop there. Thank you. Thank you, President McCulloch. Jamie Hummingbird is the Chairman of the National Tribal Gaming Commissioners and Regulators.

Welcome. Thank you, Chairman Murkowski, Vice Chairman Schatz, and members of the committee. I thank you for the opportunity to appear before you today on behalf of the National Tribal Gaming Commissioners and Regulators, the men and women that— so noted by Vice Chairman Hill— the 6,000 men and women that are effectively regulating tribal gaming across the country today, protecting the integrity of the Indian Gaming Regulatory Act, tribal-state compacts, and the federal trust responsibility owed to tribal nations. I appear today because the rapid expansion of sports wagering prediction markets poses an immediate threat to tribal sovereignty, to the integrity of the Indian Gaming Regulatory Act, and to the governmental revenues, as so noted, that go to so many vital tribal services. These products are marketed as financial instruments, purported commodities, derivatives or swaps.

But let's be clear here today and call them by their true name. When you wager something of value on the outcome of a sporting event, it's sports wagering. Relabeling the wager as an event contract or a prediction market or derivative does not change what it is. If the federal government permits CFTC-regulated platforms to offer sports wagers nationwide outside of tribal and state gaming systems. It will create a federal loophole that bypasses IGRA, undermines tribal-state compacts, and displaces nearly 40 years of hard-won intergovernmental cooperation.

As I'm sure you are aware, Congress enacted IGRA in 1988 to promote tribal economic development, to promote tribal self-sufficiency, and to promote strong tribal governments while ensuring that tribes remain the primary beneficiaries of gaming on Indian lands. IGRA creates a careful balance among tribal sovereignty, federal oversight, and for Class III gaming, tribal-state compacts approved under federal law. For nearly 40 years, sports wagering has fallen squarely within the Class III framework and must be conducted through a robust regulatory control made possible through tribal-state compacts that are carefully negotiated between sovereign states and tribes. That framework is a federal Indian law success story. Tribal gaming commissions work daily with state regulators in the National Indian Gaming Commission to address licensing, audits, patron protection, game integrity, responsible gaming, facility safety, and compliance.

We are a specialized, local, and accountable form of regulation. The CFTC is not a gaming regulator. It does not have the personnel, the field presence, direct patron interaction, geolocation oversight, or surveillance expertise to come compare to what the tribal regulators exercise every day. Now, recent market conduct confirms the seriousness, seriousness of this event. In Nevada, the Nevada Gaming Control Board accepted the surrender of Flutter Entertainment and FanDuel approvals and approved withdrawal requests from DraftKings pending sports wagering applications after concluding that the company's intended sports event contract activity was incompatible with participation in Nevada's 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 equally direct and harmful. Indian gaming revenues are at risk.

They fund all of our essential services that we provide to our tribal citizens. The prediction market platforms extract value from the local communities without comparable compact obligations, tribal licensing, state and tribal revenue sharing obligations, or dedicated contributions to problem gaming mitigation.

Consumer protection is also at stake. Tribal gaming regulators enforce licensing, internal controls, annual audits, responsible gaming safeguards, age and identity verification, as well as market integrity protections. Predation market sports contracts do not have an equivalent protection. A national loophole for sports wagers under a financial label risks underage participation, inadequate geofencing, and weak responsible gaming protections.

Federal consultations obligations reinforce the need for caution. Policies that have substantial direct effects on tribal nations, the federal tribal relationship, or the distribution of power among sovereigns requires meaningful government-to-government consultation. Consultation cannot occur after an agency has already allowed markets to develop in a manner that impairs tribal gaming authority. It must be timely, it must be substantive, and it must be capable of affecting the outcome. The NTGCR respectfully asks Congress to act quickly and decisively.

First, Congress should make clear that sports-related and casino-style event contracts are gaming products. When they involve staking value on uncertain outcomes for a possible payout. Second, Congress should enact express savings language confirming that nothing in the Commodity Exchange Act, the Clarity Act, or any federal market structure legislation preempts, supersedes, impairs, or limits IGRA, tribal gaming laws, tribal-state compacts, or other tribal-state federal gaming protections. Congress must also direct the CFTC to halt the self-certification or approval of sports-related event contracts until the agency completes formal government-to-government consultation with tribal nations and coordinates with the National Indian Gaming Commission and 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.

Now, the question before policymakers is not whether innovation should be allowed. 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, to bypass tribal regulators, undermines tribal-state compacts, and siphon government— governmental revenues from Native communities. The answer must and should be an emphatic no. On behalf of the NTGCR and tribal gaming regulators who 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.

I thank you again for the opportunity to share this information with you and appreciate the meaningful and long-lasting impacts the prediction markets in sports betting will have on Indian Country as well as the nation as a whole. Thank you. Next, we'll hear the state's perspective. We have the Solicitor General from the State of Ohio, the Honorable Murtha Sidran. Welcome.

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. 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. We have litigated them in in the Sixth Circuit, coordinated bipartisan state participation in litigation around the country, and most recently led 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. That is because gambling has long been understood as implicating the state's responsibility to protect the health, safety, and welfare of their citizens. In Murphy v. NCAA, the Supreme Court reaffirmed that principle, holding that absent federal legislation, states remain free to make their own policy choices about whether and on what terms to authorize sports betting. Some prohibit sports betting altogether. Others, like Ohio, chose to authorize sports betting only after extensive public debate, and in Ohio, after a constitutional amendment approved by a narrow margin of voters.

The federal government's role has historically been very different. For about a century, Congress has regulated financial derivatives markets through the Commodity Exchange Act. 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, but markets founded on speculation like sports betting, require a different kind of regulator altogether. 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 products exist merely for diversion and amusement. That difference critically informs the regulatory response.

Federal law, like the Commodity Exchange Act, is a sophisticated and highly effective framework for regulating 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 bettors from the unique harms of gambling. States regulate gambling differently because they are trying to solve a different problem. Their focus is not facilitating commercial market transactions through carefully defined market mechanics. Their focus is protecting participants in a gaming environment.

State gambling laws thus ask different questions. Are vulnerable individuals protected? Are operators promoting responsible gambling? Are sporting events insulated from corruption? To address these consumer-focused 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, report suspicious betting activity, maintain responsible gaming programs, and administer voluntary exclusion programs for individuals struggling with gambling addiction, among other things. 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 prediction markets profit from a much larger number of casual sports bettors. 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.

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. 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 deep expertise in licensing, consumer protection, responsible gaming, integrity monitoring, enforcement, and protecting vulnerable populations.

Those are precisely the issues prediction markets now present. Any federal solution should give due regard to the state's expertise on the matter. I thank you again for the opportunity to discuss this. Thank you. And to our colleagues that just came in, we've, we've heard the tribal perspective from the Indian Gaming Association, NCAI, and the National Tribal Gaming Commissioners.

The Solicitor General has just given us the state's perspective, and our final person here on the scheduled this afternoon is Dr. Harry Lavont, who is the Director of Gambling Policy of the Public Health Advocacy Institute, to kind of talk about it from the human side. Madam Chairman, Mr. Vice Chairman, I'm going— I've tabled my pre-printed remarks. I'm going to get us dangerously close to back on schedule for you.

That doesn't mean anyone on prediction markets should be posting an under right now, but I am. My one gambling joke of the day. My name is Harry Levant. I'm the director of gambling policy with the Public Health Advocacy Institute at Northeastern University School of Law. I'm also a gambling addiction clinician, run a gambling treatment recovery group, and I'm a gambling addict.

Made my last bet on April 27th, 2014. Survived suicide attempt that same night related to my in my gambling addiction. I hurt a lot of people in my gambling addiction. On February 13th, 2015, I stood in a courtroom in Philadelphia, Pennsylvania. It wasn't all that unusual for me because I had been practicing law for 23 years.

22 Of them I remember fondly, the last year obliterated in the haze of what can only be described as a pathological gambling addiction. And I stood in that courtroom that day not as a lawyer, but as a disbarred lawyer and a defendant in Commonwealth of Pennsylvania versus Harry Levant. And on that day, in the presence of the clients who I devastatingly hurt, the court I had betrayed, and in the presence of my 3 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 my gambling addiction. As a therapist now, I'm supposed to use the word "disorder." Disorder is too easy-sounding a word. You know, we have a disorder when the microwave stops heating the vegetables quite quickly enough, you need a new microwave.

Addiction is ugly, it is devastating, it is painful. For each person who struggles, 8 to 10 others around them are hurt. I have the privilege of being here with you today for a fundamental reason, something I can guarantee you. Everyone in this room will agree with, or need to look in the mirror if you don't. Prevention of harm is the single best form of treatment.

Single best form of treatment. And on that day of my guilty plea, as I was being sentenced for my felonies, I made a pledge. The pledge that I made to the court and in the presence of my children was that if I could get well, I would dedicate my future to helping prevent others, particularly younger adults, from suffering a similar fate. But you see, I made my first bet when I was 15 years old. And the key word in my vow was the word prevent.

I am not a prohibitionist. I'm going to make the Honorable Senator Cortez Masto and the distinguished members of tribal nation happy. I'm in favor of the properly regulated legalization of sports gambling. But what we have today is far from that. And the two questions I get asked the most often— 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, would I have been so brazen to make that vow?" And 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 defectively designed product. We say it again: defectively designed product. Why? It brings together all of these interests. The sports leagues, the teams, the owners, the players, the 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's the equivalent of grandmom's Thanksgiving apple pie. You know, at the end of Thanksgiving night, we all say, "Give me a little piece of pie." Uh-uh. We all want as big a piece of pie that night as we can get. And the same thing is true with all of the entities involved in delivering micro-betting and prediction market— micro-betting.

They all want as big a piece of pie as they can get their hands on. The problem is, this is a magical pie. It only has one ingredient, and 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 from DraftKings, FanDuel, MGM is devastatingly lethal. That's for another hearing.

Prediction markets take us to a whole new level. And in closing, before we turn to questions, be there any doubt of whether prediction market sports contracts are gambling? I go to the opening comments of the Chair and the Vice Chair. Each of you, and I wrote it down, used the word bet. But most importantly, we're not talking about just Cow Shee and Polly Market.

This is DraftKings ad I clipped 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 now down to people as young as 18 years old. Gambling in all 50 states. I have had in the last 3 months 6 clients in my recovery group return to gambling on prediction markets. Why?

Because they thought they were making investments.

Our Article III courts are going to decide a lot of legal issues. In the meantime, this distinguished body Congress has the plenary authority to act. 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 we'll come back each time you ask, because there are ways to make this safer. And I join with the distinguished leaders of tribal nations.

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. Thank you for your testimony.

We have a lot of members here, and I want to make sure that we have an opportunity to, to weigh in with those who we've invited. I'm just 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, it was mentioned by several of our tribal leaders here, the impact 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. I am the— not only the Chairman of this Indian Affairs Committee, but I am Chairman of the Interior Appropriations Committee, and 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 and can we do a better job in collecting and analyzing it and sharing it?

Yes, thank you, Madam Chair, for the question. Currently, IGA is working on analyzing national data and the impacts of prediction markets on tribal sports gambling. The data is primarily proprietary— proprietary, say that word right— proprietary, and to obtain it, we would have to have the tribes give us that data. So it's—. Is that something that you think there's a willingness to share because of the impact?

And we, um, yeah, I definitely think so. I know, like, in the state of The tribes in the state are working together to analyze the sportsbook market for the state of Wisconsin. Again, just for getting those verifiable numbers and that analysis for, for the tribes and the state to work off of. So there is definitely forward movement. We're actually expecting that phase 1 of that report due in about 10 or 15 days.

Okay. I think it's really important to We'll try to get that. Senator Schatz. I'm going to try to do this quick, and so because we have so many people, I will try not to chew up 5 minutes. Quick question for each, one sentence if possible, and you're free to agree with each other.

What is the one thing that we should be doing in the short run? Go ahead, Mr. Hill. I think the amendments to the Clarity Act would be probably step one. Or moving forward with the Senate bill that prediction markets— Sports betting. Yeah, sports betting.

Mr. Macaro. Enforcing existing law. The CEA itself prohibits gaming. Go from there. Also, though, fill out the commission.

It is really an abomination. It's an upside-down regulatory agency to have one commissioner when there are 4 vacant seats on that commission.

And I would echo that, the, the need for us to have some solid regulatory framework to look at and have a clear understanding of what is intended by the laws versus how they're being interpreted and applied. If we were able to get some clarity, if you will, from the pun intended, on that issue, that would be a great benefit.

Agreed with that. Legislate, and legislate in a way that makes clear that poorly fit financial derivatives law does not preempt state and tribal law in the way that is being litigated across the country. Emphasis on short-term that you can actually do. Bring the sports league commissioners in. 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 multi, multi-billion-dollar contract with a brand new prediction market yesterday. You could have hearings today similar to the tobacco hearings. Things would change.

Colleagues, Senator Smith. Thank you. Thank you so much. I really appreciate this. You know, I serve both on this committee Committee and also on 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 try to figure out, like, how it is that we have this sort of just rapid expansion of prediction markets in complete contravention to IGRA and state-tribal compacts and tribal sovereignty, so your points are really So well taken. Two quick things. I think I saw data, which appreciate what Senator Murkowski was asking. I think I saw data from the American Gaming Association which said that they estimated that it was roughly $1 billion in state and tribal revenue that has been lost. I don't know if anybody wants to comment on that, and I don't know how they gathered that information, but just to give us a sense of scope of what we are talking about in terms of lost revenue.

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? Yeah, I think that is important information. But then also looking at the numbers that we are able to report on about the NIGC report that tribal gaming expanded about 4 or 5%. Yes, right.

24 To 25. But then you look at those totals for from the prediction markets of 2,000% growth from one year over the next. So that's really, I think, very expansive numbers and being able to— that definitely has to have an effect on legal gambling in all the states where it's allowed. Thank you. Yeah, Chairman Caro?

The quickest answer I can give is in California alone, we think there's a at least a 5% revenue hit, I suppose the best way to say that. It is based on AGA's numbers. And so this is a very qualified answer. And I wanted to ask if the record for this roundtable would be open, if there is a record that would be open subsequent to this. I'd like to get better metrics in so that will underscore the receipts for what I just said.

So, all right, thank you. That's great. And then just quickly following up on what Senator Schatz was asking about, I mean, would it 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? I think, Mr. Hummingbird, you laid out— I think I heard three things that we would want to accomplish. And it seems to me that we have potentially moving vehicles that we could use to address these issues which are urgent in a timely matter.

Okay. Sorry, could you repeat the question? I just wanted to— you don't even need to answer. I just want to point out to the committee that I think we do have moving vehicles that could, you know, just clarify that the Commodity Futures Trading Commission, the Commodity Futures Act, does not preempt IGRA or tribal-state compacts, and that prediction markets need to abide by existing law. That seems to me to be a fairly simple and should be non-controversial.

It should be. I agree with that, Senator. But 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 intended, what is acceptable versus what is not. And if we have the ability to go and clarify to say that no, as Chairman McCarrow so rightfully pointed out, that was not the intent of the statute.

CEA, and for a federal agency to unilaterally decide that it knows the law better than those that passed it, I think is a wrong move to take. Thank you. Fortunately, we have a common sense chairman of the Agriculture Committee who's working on a farm bill. Your response, not necessarily to Senator Smith, but any comment? No, no, I think it's really important that you all are up here.

All of us have real concern, especially about underage gambling, and then again, you get into all this situations of insider trading and this and that. So I think you've got a really good case to make. I don't think enough people up here understand it yet. The remarkable thing about the prediction markets is how fast they've grown. Nobody envisioned this happened, you know, within— what did you say, early '25 or—.

2,000% Growth year over year. So that's amazing. Again, with, you know, it appears only growing larger. So I would encourage you to have these, you know, get up here and continue to visit with members, build your coalition. Because you're not alone.

There's a lot of other people that are— such as the nice lady that's sitting next to me, the center from the bottom. There's a lot of people that are very, very concerned about this. As far as sticking in clarity and sticking in the Farm Bill, the problem there is that you're conflating issues. I mean, there's a lot of people that are working hard on the Farm Bill, and the Farm Bill's the Farm Bill, but this really doesn't have anything to do with the Farm Bill. See what I'm saying?

I mean, just, you know, it'd be like you having an important bill and somebody sticking the Farm Bill in your, you know, in your bill. So I don't think those things are going to happen. I think you run into the same problem with clarity in the sense that crypto is not prediction markets. So I think you've got to build your case. I'm very sympathetic.

I want to help you. And—. But I think that's the way you do it. It's just what you're doing now. I think you're— and your testimonies today were great.

Every— and it's really interesting. You did a really good job of having a lot of different insights into this. It's not like, you know, everybody's saying the same thing. You all did a really good doing a good job. So, thank you.

Thank you, Chairman. Senator Cortez Masto. Thank you. I want to thank you all as well, and I appreciate the Chairman being here because this has helped me to understand as well as I work on the market structure for clarity, which is to give the cryptocurrency, crypto, some sort of market structure and regulation for cryptocurrency. What is your concern concerned that somehow that opens the door for this type of prediction market to continue through cryptocurrency?

And maybe the Solicitor, let me have you address that. I think maybe this connects back to something Senator Smith was asking about as well. One of the things that has been a large part of the fight here is trying to fit these sports betting wagers and these prediction markets or these trades that are happening into a particular financial instrument that's already being regulated under federal law. Now, the Commodity Exchange Act lists a number of instruments, options, futures, and the one that we keep fighting about is swaps for the most part. And I think with respect to I guess, first of all, clarity.

One of the things that's critical is clarity in defining an instrument and saying this instrument is this and this instrument is not this. So one of the critical things that could be helpful for the perspective, from the perspective of regulating sports betting as not a financial derivative, is to say that this is not one of those instruments. And I think by saying what it is not and giving clarity to that, it's not just about whether state law is preemptive, which is the second question. It's the first question is, does the Commodity Exchange Act even cover this? And so to the extent that further definitions actually clarify that these instruments don't touch on sports wagers or other forms of gambling, it would actually make it less likely to, I guess, shovel in or tunnel in instruments that don't really belong under federal law.

So let me see Let me see if I understand and clarify this. If we do not address this issue in the Clarity Act, but for instance, we do pass the Prediction Markets or Gambling Act and outlaw it everywhere else, but it's allowed in this legislation, crypto, and on the blockchain, there is a world where in crypto and the blockchain, prediction markets could exist and still do sports wagering and gambling in casino-style gambling, correct? I think that's right, but with one caveat. I think cryptocurrencies might fall under other forms of regulation under federal law, including, for example, the Securities Exchange Act. So I think we do need to be careful about how these instruments are being defined, whether they fall under the Commodity Exchange Act's umbrella or some other federal law.

And so, to the extent that I am comfortable speaking about the Commodity Exchange Act, because that's where all of 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. So what you're looking for is just the clear definition that this, this new financial market should not allow this type of gaming, prediction markets, in the way that they're trying to do right now in sports wagering and gambling. I think that's right. I think that would be very helpful. Yeah.

Anyone else? Prediction markets have been around a long time. The prediction markets aren't new. Taking this type of action is what's new, and to go back to— combine this with Senator Smith's question as it relates to preemption, I think the missing link there, Senator, is that this hasn't been declared gambling. If this were declared gambling, the prediction markets wouldn't be able to say, well, we're under the purview of CFTC.

That seems to me to be the easiest thing to get a majority view on here. This is gambling. Once you you do that, other things fall into place. And Senator, in response to your concerns about what happened with crypto, I, I agree with the Solicitor General because you would then 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?

Yeah. Would that world be the mental health and public health threat that we see today? No. Well, and, and let me just put a finer point on this, is because This issue that we're talking about right now is still working its way through the courts. And some of the courts— I know in Nevada, Cauchy is temporarily banned from operating in the state because a judge has found its event contracts to be indistinguishable from traditional sports betting.

Right? So there's still a state of flux here, and the goal here is— and I think from what I'm hearing from all of you— is to figure out how we preserve the states' rights, federal Indian gaming rights to regulate this like they traditionally have done sports betting as well as casino-style gaming. Am I missing that? Is that correct? I just take it a step further though.

There still needs to be minimum federal safety. You can't just pass this back and have patchwork of 50 different states. There has to be minimum federal safety standards under the plenary authority of Congress, whether we're talking about sports contracts under prediction markets or we're talking about more traditional same-game parlays on DraftKings. There is an overwhelming need. We've seen in the 8 years since Murphy, this is out of control.

What we should all be agreeing on is we need minimum federal safety standards that governs all of this. All right, then you turn— let me just have one final question because I know, and I think this is the distinction. Let me ask you, what rules and regulations do tribal regulated sportsbooks have to follow that Cal-SHE and other prediction markets do not? And what I mean by that is I know traditionally there's been consumer protection issues that, that many have to follow to guard against, right? There's suspicious betting activities, illicit activity, money laundering, those types of things.

I'm curious, what's the difference between Indian gaming and what Cal-SHE has to do. Well, thank you, thank you for that. Yes, the, the tribal gaming regulators across the country operate a multi-level, multi-tiered system. We have a number of regulations not only from the federal government but also through our tribal-state compacts that we are obligated to ensure are being implemented effectively. Anti-money laundering is a very good piece, a very good example example to use in this situation, because as we stand right now, there are no requirements for prediction markets to produce any type of effort to, to go towards and identify the individuals that are placing their prediction market or purchasing their contracts or their swaps.

Thus, age restriction restrictions as well. You have an age restriction. We have age restrictions. That you follow that they do not. And I firsthand know that 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 cards that they have from their mom and their dad and wager on baseball.

I saw that happen. And so when we have age restrictions, We have know your customer, KYC, restrictions for processing financial transactions. We have to have a face to go along with this. So not only do we have the money laundering issues here, but there's also other illicit activities that could follow with that. And if you— if a gaming— Indian gaming facility were to run afoul of this and violate these regulations, is it possible you could lose your license?

The individual casino could lose its license altogether, correct? If there were a violation, if the tribal gaming regulators were not able to correct that, then yes, it could get us to have some negative repercussions. And if somebody like— if a company like Cal-SUE and others run afoul of this, what happens to them? What's the repercussions? There is none.

Yeah. Thank you. I appreciate that. Yeah. Senator Armstrong.

Yeah. Thank you, and my questions are going to go kind of along the same lines here as Senator Cortez Masto. I think there's two things here. There's the health issue, which you raised, Dr. Lavont, which I— it seems like that's— you're suggesting that needs to be a federal-level issue. And then there's the economic issue that would affect states like Oklahoma that that has tribal gaming as a big part of its economy.

And so maybe I'm going to start with the health piece of this first. Are you suggesting that the same health standards would apply to this as would apply to Indian gaming? And how does that work today? That doesn't connect for me all that well. Sir, I think it is both.

I respect the Tenth Amendment. I think that the role of Congress is to create minimum federal safety standards governing gambling. The courts are going to sort out whether sports contracts are gambling or not. They are, but it's going to take some time to sort it out. We should all, in this new world of online gambling, be able to agree there needs to be some minimum federal safety standards.

And I would 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 unless 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. But right now it is truly, because of the world of online gambling, the wild, wild west. That's where Congress comes in with minimum standards and then respects the 10th Amendment for states to go further if they like.

Okay, thank you. And Chairman Hummingbird, would you see that if we did have those federal safety standards, how would you see those being implemented in IGRA? If the federal safety standards that we have? Yeah, the federal safety standards that we would impose on prediction betting, how would— would you see those applying equally and enforced in the same way at Indian gaming? Exactly.

If there are federal regulations out there, safeguards for this, they're— at present there are not. There's nothing comparable from the CFTC that even remotely approaches what we have in Indian gaming. We're even on the state-tribal state compact side of things. So in order for them to offer something that we feel is equally covered Under our existing frameworks, our existing tribal-state compacts, we would expect CFTC and the operators in the prediction market realm to follow as robust a regulatory scheme as we have. But right now, there is no indication that that is the intent.

Yeah, okay, thank you. And then on the tribal economic side, I think— Chair Murkowski asked this already, but I just want to dig in on this a little bit because, you know, in Oklahoma, the sports book has been an issue, you know, in play for a long time in terms of state versus tribes. And I'm curious how you think— how well you all have been measuring the impact of online betting, including sports betting and including the prediction markets and how big of an impact you all think that is to the Oklahoma tribes?

I would say at this point it may be a little bit early to comment on that. I mean, since this is still— I mean, it's been a growing industry, and as the Chairman had pointed out, that this has grown exponentially over the last year. So the The real ability for us to measure the actual financial impact is not going to be known to us probably for a little bit more time.

We can say, however, just by the numbers that have been voluntarily reported, or at least some estimates from our fellow economists out there, that there are hundreds of millions to billions of dollars that have been removed from legal betting avenues, whether that be through the states or through the tribes. So if we were to use that as a measuring stick, I would say you're 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. Okay. And maybe just at a high level, what's been the trend of Indian gaming revenues through this period as we've seen this growth in prediction market betting? Senator, if I could speak to that.

Please, thank you. Because, you know, of course we're aware that the National Indian Gaming Commission publishes revenues, tribal revenues in the aggregate, and the most recent report indicates another year of record-level revenue production.

But that's where I think there needs to be caution when you interpret what that means.

The NIGC's aggregate revenue report gets the causality backwards. That 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. And that's 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 does not necessarily reflect existing operations that are doing better. What would be a truer number would be to compare same facility year-over-year performance. And we think that that would present a very different picture if that were to be done. So aggregate growth from new entrants doesn't really tell us anything meaningful about where prediction markets are eroding customer base of facilities that are already operating. Now, I can tell you on 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 that our tribal gaming facility knows what, what revenue was generated on this day, which was today, Tuesday, on this day last year for this first week of August, and the year before that, and the year before that. We can compare week to week like that over different years, month to month,. And then of course, years by years. So when, for instance, there was a time during COVID during the pandemic, when all our facilities were shut down for 2.5, almost 3 months. And during that time period, card clubs opened up and we could see what their operation was like.

And then 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. Well, we're seeing that now. We haven't— we don't have it, those quantifications or metrics, uh, ready to hand over yet, which is why I asked about the open record, how long that record would be open for this. But we see those impacts because revenue is tracked daily, weekly, monthly, and compared.

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 and growth during that time period, we see how that tracks with revenue production. And we know that property by property, there are over 55 in California. Those are the reports that we are all seeing. I just want to add a little bit.

I'm going to interrupt here. Just for a moment and be very rude because I have a 5:15 Zoom that I'm going to zoom off to. It's to the Alaska Native Health Board, and this is actually going to be one of the issues that I raise with them when we're 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.

That— this record is going to be part of, of our our committee roundtable. Senator Lujan, I want you to have the chance to ask any follow-ups and any other additional questions that members may have or final comments. This is kind of like a— everybody's dream, the chairman and the vice chairman leave the room and the mics are still on. But I think this speaks to the degree of interest the challenge that we have in front of us. It is moving so fast, the impact is so great, and, and we don't have all of the data that we need now.

So getting this information is greatly appreciated, and I truly appreciate the interest from so many members. So I'm going to scooch out of here. Staff will keep us all honest in terms of when we turn off the lights, but thank you for Thank you, Madam Chair. Thank you, Senator. Thank you, Senator.

No, go ahead.

Thank you for taking time to— thank you for being here today and everyone that's been in here and all the staff that are in here as well. I wanted to follow up with one of the questions that was asked by Senator Senator Smith of Minnesota about— that points back to the correspondence that the Indian Gaming Association sent to every senator. In it, it provides two bullet points in here. Number one, number two, about language that is being more than recommended, advocated for to address the issue that we're 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.

The DeFi section of the bill released from the Agriculture Committee creates an exemption.

That exemption without this language will create a loophole. Is that the right way to interpret that? Yes, Chairman, I believe so. And so I don't think it was anyone's intention to create a loophole for prediction markets. I've not heard that yet.

In all the meetings I've been in and conversations and all the rest. And if in fact the intent of the exemption in the DeFi section is not to create a loophole for prediction markets, then this language just says that there's no gaming, there's no gambling, there's no prediction market in that space. Is that fair, Mr. Chairman? Yes. And now, I'm not a lawyer.

There's a lot of smart lawyers in this room. But I think that's— that doesn't address the first bullet. But if in fact the language that was included in the DeFi section of the ag bill is the language that, if it's not addressed, creates a loophole for prediction markets and then gambling everywhere— all signs of gambling, not just prediction market gambling. Video slots, video this, video that. It's all allowed everywhere.

What's—. Not Kalshi, what's the other one? Polymarket. Polymarket. So Polymarket is not DeFi yet.

They're in the blockchain, but they're not here yet. And I'll emphasize yet, because if there's a loophole that they can exploit, why not roll in this space? And so it Is— did I describe the second bullet that you put together, Mr. Chairman, in my, my basic understanding, my simple understanding of, of what your correspondence was to us as senators? Yes, yes, that's correct. And I think looking at those as, uh, looking at, you know, Polymarket is, uh, doing this offshore right now.

The CLARITY Act, uh, brings it into the United States, as you, as you'd mentioned. So again, that's just creating that loophole again, for these markets to move into another form and further unregulated area that raises very, very broad concern from the tribes across the country. So if the language that creates the loophole is in this legislation, this should fit. Correct. I would ask all the lawyers in the room as well, you can get back to me be on that as well.

But, um, that does not address number 1. I think that, you know, with, with the recommendation around bullet number 1 here, that, that's the, the, the Schiff-Curtis language, as, as I understand it as well, that is being advocated for. Mr. Chairman Makaro, is that— did you have a response to that, or—. I agree with Chairman Dawes. Okay.

I wanted to touch on a broader point. Yes. Regarding Clarity Act, if you If you're done. Please. Well, look, the Clarity Act represents the most significant expansion of the CEA since 2010, since Dodd-Frank, significant expansion.

The question is, why would Congress support expanding the CFTC's jurisdiction into this Clarity Act space, blockchains and crypto? Why would it support doing that? Expanding authority, expanding jurisdiction at a time when they are violating state laws, when IGRA is being violated, when they are actively suing states, when they are revising longstanding regulations to primarily allow for unregulated gaming, unregulated national gambling under the banner of the CFTC, which has only 1 of 5 commissioners and 4 vacancies, and what commission could actually provide adequate oversight, even if there were rules there? So, you know, the CFTC is under a condition of regulatory capture right now, so it's really a farce. So it's farce.

So it is puzzling that Congress would support the expansion of the CFTC's jurisdiction and authority under these conditions. There needs to be a reset where, you know, until the law actually changes and then the law is enforced, that conditions are right for an expansion of authority and jurisdiction. And until then, it doesn't make sense, doesn't make logical sense, which is in short supply, as my co-panelist here said earlier, to do so and move forward in this manner. The way that it's been described to me is The, the, the words that I read from that correspondence, that another way to describe that is with spot market limitation, I think. And so people in the room that have worked on legislation know what I'm referring to.

Um, that's something that myself and other colleagues have advocated for as well. Um, so I very much appreciate the testimony today, and I, I just wanted to zero in on, again, reminding us, if language and legislation is what's creating the exemption that lead to a loophole, then that's the place to address it. And I just wanted to make sure that I was getting that right with everyone. Doctor, did you have something? Just to follow in on what the President is saying, I agree with you.

However, you mentioned, you know, Polymarket not being official. Polymarket is the official prediction market partner of Major League Baseball and the NHL. They're here. They're operating. The issue is there's no enforcement.

This is all taking place right now, right in front of our eyes. And you can close a loophole like that, I agree with you. But as the president points out, if we don't enforce something here, you're legislating and no one— people are throwing their noses at it. It is just taking place at light speed, which is where the mental health and public health crisis comes in, because they're just doing what they want to do. That's why I brought these two little posters.

They're advertising, even though 11 states haven't legalized this. They've exercised their sovereign jurisdiction to say no. Minnesota, center of the state. In they all come. And we're just devoid of any enforcement.

And if Congress sits back and waits for these loopholes to get closed through the courts, the crisis is going to grow exponentially. We're talking about people and families. And I think your point is well taken. I just want to take it one step further because poly markets here.

Dr. Lavant, the issue that you raised would be addressed by language that is being proposed by two senators, Senator Curtis of Utah, Senator Schiff of California. The portion that I was referring to was narrowing in on language that is included in the defi section of the Ag released legislation that would create a loophole if it would go into effect. And I do not believe that it was, again, the goal of anyone to create a loophole that would allow prediction markets, spot markets, to also ride in that exemption language that was created for other reasons. Mr. Chairman, last, and then I'll yield back.

Yes, I think you're very much on point with this, because 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 very clear what was intended so that 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 have only been around in really gaining steam over the last year. If we do not address these issues today in whatever form, you know, whether we're going to put some onus upon the CFTC or restrict them or whatever form it takes, something's got to be done, because if we don't, we're on a very slippery slope. And particularly when it comes to things, uh, along in that crypto area, because we're going to— what you're going to see right now, you, you You've got 10 actors within the prediction market arena.

There's going to be more. And so, as we are going to go through this, and it's not necessarily the size that's the problem, it's the underlying issue of whether or not they are going to be allowed to, they being CFTC and even the prediction market operators, are going to be allowed to operate within the space that they define. And if they define that, what's the next step? What's going to be the next thing? Because there's always going to be a next thing.

So if we do not take the action that we need to now to nip this in the bud, so to speak, then we are going to be setting ourselves up, not just the tribes or the states, but the entire nation as a whole, for a much larger headache than what we can currently deal with. And if we deal with it now, And I think my panelists here that touched upon that old proverb, you know, ounce of prevention is worth a pound of cure. We have the ability now to administer that ounce of prevention, but it must be done and it must be done pretty quickly. Thank you very much, General. Let me just respond real quick because it's really interesting that you brought that up.

I was asking Nathan about it. Who's being the point person on ag regarding this. Nathan, what we're proposing, why don't you tell— go to the microphone and tell them what—. 7 O'clock tonight, so—. Yeah, this is your chance to— but again, this is a really important point that the senator brings up.

Yes, sir. Thank you, Senator Bozeman. So the language that we used in-house or in the Ag portion of the bill was passed by House Clarity. We do think it's limited to spot, but we've heard the same. We saw the letter you're referring to, have heard from your colleagues wanting to limit it to spot.

So we've also come up with other proposed language that we think limits it to spot as well. Happy to send that to Kelly, your staff. And I think I don't speak for Leader Thune and at this point it's a little bit above our heads, but I think all this is still up for debate and so happy to do that. But we very much want to work with you on that. Again, that's— I really hadn't heard of that, but, but yeah, so thank you so much for bringing up, as always.

That's all that I have.

So I guess let me do this. Let me thank everyone for coming for the working group. We appreciate you all being here. Thank you to my colleagues. And we will end the working group session now.

Great. Thank you so much. Thank you. Thank you to all senators. And we are adjourning the roundtable.

Thank you. All right.