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- By Brian Edwards
- Gaming
The Mohegan Tribal Gaming Authority is backing Connecticut's efforts to stop prediction market operators from offering what tribal officials call illegal sports betting that violates the tribe's exclusive gaming rights in the state.
During a first-quarter earnings call Thursday, Mohegan Chief Financial Officer Ari Glazer said the tribe is working with state officials to halt unlicensed gambling on platforms that allow users to wager on sports outcomes.
"I think the two Connecticut-based Native American tribes have exclusivity on all forms of gaming in Connecticut, and we are actively working with all of the Connecticut constituents and regulators and government to ensure that that is the case," Glazer said.
The conflict centers on whether prediction-market platforms are effectively offering sports betting while sidestepping the compacts, licensing requirements and regulatory oversight that govern tribal gaming under federal law, according to a recent Brookings Institution report by legal scholar Patrice Kunesh.
Connecticut's Department of Consumer Protection Gaming Division sent cease-and-desist letters in December to prediction market platforms KalshiEX LLC, Robinhood Derivatives LLC and Crypto.com, ordering them to stop offering illegal sports wagers in the state, according to the Hartford Business Journal.
The platforms allow users to buy and sell contracts based on whether specific events will occur, such as which team will win a game, but characterize the activity as prediction markets rather than sports betting.
"Sports related event contracts are gambling, plain and simple," Glazer said during the call. "I think there is no debate."
He said Connecticut is pursuing legal action against the platforms, and the tribe is aligned with the state's position.
"The state of Connecticut has sent cease and desist letters to the predictive event contract operators," Glazer said. "There was a hearing as recently as yesterday as the state of Connecticut. So today, the state is pursuing legal action, and of course, we're supportive of that."
Sixteen tribes and the Indian Gaming Association filed an amicus brief in Connecticut supporting state regulators who ordered the platforms to halt unlicensed online gambling, according to Decrypt.
Decrypt reports that the tribes said Kalshi has acted as if "Congress gave it permission to enter Indian lands and siphon gaming revenues away from tribes over such tribes' objections."
Gov. Ned Lamont proposed legislation that would prohibit prediction market platforms from allowing use by or advertising to people under 21, with civil penalties up to $50,000 for violations. The bill also calls for a study by the Department of Consumer Protection, in consultation with the attorney general and Connecticut's two federally recognized tribes, on the effects of prediction markets on problem gambling and revenue to licensed gaming operators.
Glazer acknowledged it remains too early to determine the full impact of prediction markets on tribal gaming operations but said the platforms raise regulatory concerns.
"We follow the prediction markets very closely," he said. "I think we're very aligned with others in the gaming industry that we're concerned about regulation and having fully regulated gaming products, we think that serves the consumers best interest."
The concerns emerged as Mohegan reported first-quarter net income of $108.5 million for the quarter ending Dec. 31, compared with a net loss of $85.9 million a year earlier. However, the profit was driven almost entirely by a $102 million non-cash accounting gain related to discontinued operations in South Korea.
Mohegan Digital, the company's online gaming and sports betting division, reported a 35.9% revenue increase to a quarterly record of $72.2 million. Connecticut operations were the primary growth driver, with gross gaming revenue rising 33.5%.
Tribes have pursued digital gaming with uneven results, according to prior Tribal Business News reporting. In Florida, tribal mobile betting has faced multiple legal challenges. Elsewhere, tribes have launched tightly regulated mobile offerings including a geofenced digital sportsbook operated by Navajo Nation Gaming Enterprises.
Former Mohegan CEO Ray Pineault stepped down Dec. 28 after nearly 25 years with the tribe. The Mohegan Management Board is overseeing operations during the leadership transition, but a new CEO has not been named.
