"Prediction markets like Kalshi are eroding casino revenues"…Calls grow for tougher regulation

Native American tribes in the U.S. state of Connecticut have thrown their support behind the state government’s crackdown, arguing that prediction-market operator Kalshi is siphoning off tribal casino revenues. They contend that prediction markets are, in effect, operating illegal gambling.

According to Decrypt on the 21st (local time), 16 federally recognized tribes in Connecticut submitted an amicus brief to the court backing the state’s regulatory action against prediction markets. They claimed Kalshi is diverting casino revenue outside the tribes without their consent, in violation of the Indian Gaming Regulatory Act.

Earlier, in December 2025, Connecticut issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com, demanding they halt unlicensed online gambling operations. State regulators said the firms were offering sports event contracts to Connecticut residents, and ordered them to immediately stop providing the services and to suspend allowing users to withdraw funds.

Kalshi, for its part, filed a lawsuit alleging that the Connecticut Department of Consumer Protection is threatening criminal and civil penalties. The tribes, however, were not included as direct parties in the suit, and tribal groups conveyed their position to the court through third-party filings.

In their brief, the tribes argued that “Kalshi is acting as if Congress has authorized it to enter tribal lands and extract gaming revenue,” adding that “prediction markets infringe on tribes’ inherent gaming authority.” The argument is similar to a lawsuit filed in July 2025 by California tribes against Kalshi.

Prediction markets, meanwhile, have been expanding rapidly. Data compiled by a DeFi data platform show the industry’s weekly trading volume is around $6 billion. Kalshi was valued at $11 billion after raising $1 billion in 2025, while rival Polymarket is also bulking up through major fundraising.