While the fight against sweepstakes has been won in California and other jurisdictions, that battle has been also a dry run for what the casino industry faces when it comes to sports betting prediction markets. That was one of the biggest takeaways from the Indian Gaming Association Tradeshow & Convention in San Diego earlier this month.
In California, tribes helped mobilize efforts in the legislature to pass a bill in 2025 to crack down on sweepstakes operators that were mimicking online casinos. A year ago, sweepstakes was the biggest issue discussed during the IGA tradeshow in San Diego. That has shifted in a big way as states and tribes try to end prediction markets.
“It shows that when the industry is on the same page they can accomplish just about anything,” Howard Glaser, head of government affairs for Light & Wonder said of the victory over sweepstakes. “After California, all of the dominos fell. This was the existential threat we talked about last year and it’s not that threat today. Sweeps was a test run and warm up for the prediction market threat this year. Next year it will be something else. There’s always new technology and someone looking to invade gambling laws to the detriment of the industry.”
The California tribes generated $12 billion in gaming revenue in 2025. That money goes back to the communities in the form healthcare and services for children and the elderly. Revenue that goes to sweepstakes and prediction markets cuts into that.
“We got caught flat-footed, but they didn’t expect us to come back at them this hard,” IGA Conference Chair Victor Rocha said of their victory over sweepstakes operators. “They had no way to stop us.”
Michael Hoenig, vice president and general counsel for gaming for the Yuhaaviatam of San Manuel Nation, said the key in the legislation was not just going after sweepstakes operators, but those who work with them. It made it illegal to provide the services to those operators — platform providers, financial services, and marketing.
“Other states have done the same since and it’s recognized that the laws need to be clarified because of these gray areas,” Hoenig said.
While states have followed California’s lead on sweepstakes legislation, the issue is being eclipsed by prediction markets today, Glaser said.
“One of the lessons you want to learn from the sweepstakes battle of last year for prediction markets is what worked and didn’t work,” Glaser said. “They weren’t that organized at the sweepstakes level. They are at the prediction market level. You have a much higher bar and much more difficult task ahead of you. Don’t be led into a false sense of security that if you roll out the same playbook on prediction markets, you’ll get the same result. You’re in a different league now.”
Shawn Fluharty, head of government affairs for Play’n Go and state legislator from West Virginia, said the sweepstakes industry didn’t fight the issue in court like prediction markets are today.
“Kalshi and Polymarket are saying we’ll see you in court,” Fluharty said. “You didn’t see that with sweepstakes and this is a different battle.”
Hoenig talked about how prediction markets aren’t waiting to be challenged and filing pre-emptive legal action against states in federal court.
“The prediction market operators, unlike sweepstakes, have been very aggressive,” Hoenig said. “They’re telling states, ‘We’re not leaving.’ This is going to be a long fight.”
Dan Little, chief intergovernmental affairs officer with the San Manuel Nation, said it’s not just Kalshi and other prediction market operators. Traditional sportsbooks like DraftKings have entered the space and are offering bets in California.
The initial success of sweepstakes operations and the current expansion of prediction markets have demonstrated that there’s “tremendous consumer demand” and acceptability of online gaming, Glaser said. That’s not going away.
“You have scarce legal opportunities in the U.S right now to satisfy that demand,” Glaser said. “Igaming is legal in only seven jurisdictions, but the demand for online gaming exists in 50 states. That’s the fuel and oxygen for prediction markets and sweeps. The real policy question, for the tribes especially, is what to do when you can provide online gaming technologically and the marketing money is there. As you’re fighting the good fight, don’t lose sight of the big picture, which is where the tribes are at for online gaming, to help tamp down this consumer demand.”
Rocha said the tribes are being cautious and every move has to be studied to ensure it’s the right one. Voters overwhelmingly rejected retail and online sports betting in 2022 California ballot measures.
“We’ve looked at the polling,” Rocha said. “For Californians, there is the need, but the public also sees the deterioration of society in some of these things. We’ll take a cautious and sure path, but we will have legalized igaming in California through the tribes.”
Glaser acknowledged headwinds for igaming in every state, but the longer states and tribes put it off, the wider the door opend for illegal forms of online gaming.
In forecasting a year from now, Hoenig said no federal court cases will make it to the Supreme Court. All of the cases are in the early stages and it may take two years to make it to the high court. “I’m hopeful the conversation will be about how great things are going as we’re walking toward the Supreme Court.”
Congress isn’t expected to act, given the Trump administration’s support for prediction markets, and it may take until the next administration in 2029 before something happens legislatively, Fluharty said.
Meanwhile, Glaser pointed out that the prediction markets are acquiring customers, a major asset in this business.
“They’re developing products,” Glaser said. “The most aggressive view is that a year from, there’s a bigger customer base, broader acceptance, and slot machines will appear on prediction markets. Sports betting is 90% of prediction market revenue and The next big thing is a casino-like game, including potentially brick and mortar. One of the companies opened a lounge in Washington, D.C. The lawsuits (and legislation) are going to play out. All of the things I talked about are happening in real time.”
Rocha said the good news is prediction markets are losing the publicity fight with bets on war and insider-trading accusations and profiteering from it. He said states, tribes, regulators, and others have come together to fight this.
“We’re not going to back down. We’re going to keep up this fight and we will win. There is no doubt in my mind. They know they have a limited time to lock this in before the next administration or Congress wakes up. I don’t think they’re as secure as they think they are and as vulnerable as we think they are.”