IGA Study: Prediction Markets Could Cost Tribal Gaming Up to $7.8B a Year

A new economic study prepared for the Indian Gaming Association (IGA) puts numbers on a risk that tribal leaders have described mostly in general terms: what happens to tribal and commercial gaming if federally regulated prediction markets are allowed to offer sports event contracts in all 50 states. The consulting firm KlasRobinson Q.E.D. modeled four scenarios, and in each of them the study projects annual losses to tribal gaming that range from roughly $1.5 billion to $7.8 billion. The findings were previewed at an IGA webinar, and IGA Executive Director Jason Giles indicated the full report could be released shortly afterward.

Economists James Klas and Matt Robinson presented three of the four scenarios at the webinar; the fourth, which contemplates iGaming-style products, was not covered in the preview. Because the complete report is not yet public, the figures below should be read as preliminary and as commissioned by an advocacy organization with a direct stake in the outcome. That context matters, but so does the specificity of the modeling, which gives policymakers and tribal councils something concrete to test.

What the scenarios project

Each scenario assumes that the Commodity Futures Trading Commission permits sports event contracts nationwide and measures effects over a period of three to five years after the market settles. The authors caution that losses would likely continue to grow beyond that window.

In the mildest case, in which prediction markets offer unrestricted sports contracts, the study estimates a total loss of about $7.3 billion a year across the gaming industry. Of that, tribal operators would absorb about $1.5 billion and commercial operators about $5.8 billion. The estimate includes roughly 38,000 direct jobs and about $546 million in non-gaming revenue tied to gaming properties.

In a second scenario, in which existing sportsbooks shift their activity onto prediction-market platforms, total annual losses rise to $17.9 billion, with $3.6 billion falling on tribes and $14.3 billion on commercial operators. That scenario also projects about $3.6 billion in lost state tax revenue, 92,000 jobs and $4.8 billion in wages.

The worst case produces total annual losses of $39.4 billion, with tribal gaming losing $7.8 billion and commercial operators $31.6 billion. The study attaches to it about $8.3 billion in lost gaming tax revenue and 225,000 jobs.

To put the tribal figures in scale, the National Indian Gaming Commission reported record gross gaming revenue of $46.2 billion for 2025 (see our coverage of the NIGC fiscal 2025 revenue report). The mildest scenario therefore equates to about 3 percent of that total, while the worst case represents roughly one-sixth.

Why revenue sharing is part of the story

The study's implications reach beyond tribal balance sheets because many tribes make regular payments to states under their compacts. In states such as California, Connecticut and Oklahoma, those payments are linked to exclusivity, meaning the state agrees to protect the tribes' right to offer certain games in exchange for a share of revenue. Our explainer on tribal-state compact revenue sharing describes how those formulas work.

Klas said it is an open question whether tribes would keep making such payments if states cannot protect gaming exclusivity. That is a legal and political judgment rather than an economic output, and compact language differs by state. Some agreements contain provisions allowing payment reductions or suspension if exclusivity is materially impaired; others are less explicit. The practical effect of a federal approval of nationwide sports event contracts would depend heavily on how a given compact is written and on whether a state or tribe chose to test those provisions.

The same dynamic helps explain why the issue has drawn attention in state capitals. A state that receives revenue-sharing payments has a fiscal stake in tribal gaming performance, and the study's state tax estimates are designed to speak to that interest. In Oklahoma, where the state's tribes pay exclusivity fees under their compacts, the Oklahoma Indian Gaming Association has argued that prediction markets undermine the compacts themselves.

The authors' broader warnings

Beyond the revenue estimates, the economists offered sharp commentary on the prediction-market business model. Robinson said operators "clearly believe more money is to be made there," and Klas warned that "the bleeding does not stop," arguing that platforms will "seize any crack, crevice they can to expand." Klas also said the current model is likely to "collapse under its own weight" within a decade, identifying three possible paths: consumer losses, integrity scandals and market-maker failure. He further asserted that about 75 percent of net profits on Kalshi and Polymarket go to the top 1 percent of accounts.

These are characterizations by the study's authors and have not been independently verified here. Kalshi and its competitors have defended their products as federally regulated derivatives markets rather than gambling, and a number of tribes have taken a different view by partnering with Kalshi on their own apps. Our reporting on that split is in the launch of four tribal prediction-market apps.

How to read the numbers

Economic impact studies commissioned by trade groups serve a dual purpose: they inform and they advocate. Three cautions are appropriate. First, the scenarios are hypotheticals that depend on regulatory outcomes not yet determined, including pending litigation and any action by the CFTC or Congress. Second, projected losses depend on assumptions about substitution, meaning how many customers move from licensed sportsbooks and casinos to prediction markets rather than adding prediction-market play on top of existing habits. Third, the tribal share of losses is lower than the commercial share in every scenario, a pattern that is consistent with tribal casinos deriving most of their revenue from slot and table play rather than sports wagering, though the authors' full assumptions have not yet been published.

That last point is worth emphasizing. Tribal operators would feel the effects unevenly. Tribes with sportsbook operations or online sports betting rights face more direct exposure than a tribe whose revenue is almost entirely from a rural slot floor. The study's headline figures average across very different business models.

For readers following the policy debate, the significance of the report is less any single dollar figure than the framing it gives to the federal rulemaking and litigation now under way. Our Legal Guide covers the IGRA framework under which tribes assert their rights, and the full IGA report, once released, will allow a more detailed assessment of the underlying assumptions.