(The Center Square) – One of the sponsors of Wisconsin’s statewide sports wagering legislation is warning prediction markets could take over the sports wagering marketplace if state lawmakers don’t pass a law in the Assembly Wednesday allowing the state’s 11 tribes to offer online sports wagering in the state.
“If we leave a gray area in state law, national prediction platforms will fill it without our compact framework, Wisconsin oversight, or Wisconsin consumer safeguards,” wrote Rep. Tyler August, R-Walworth. “AB 601 does the opposite: it channels activity into a regulated, Wisconsin-based, compacted environment with clear jurisdiction and accountability. This protects consumers, respects tribal sovereignty, and keeps revenue tied to Wisconsin operations rather than flowing to unaligned national apps.”
The proposal would also need to be approved by the Senate and signed by Gov. Tony Evers, who has indicated he would approve of a bill keeping gaming with the tribes.
The proposal would change the state’s definition of “bet” to allow the tribes to offer mobile sports wagering as long as the better is in Wisconsin and the sportsbook servers are on tribal land, an amendment to current compacts allowing for casino gambling and sports wagering on tribal lands despite the state’s ban on betting.
Prediction markets, however, have taken off this fall during football season with offerings very similar to sportsbooks where operators such as Kalshi and Polymarket offer what they call event contracts where users pick a side in a matchup or election and put their money behind that side against other users.
Those markets are regulated federally through the Commodity Futures Trading Commission and do not require separate state taxes that Wisconsin would receive while the tribes would pay the state a revenue share based upon amended compacts that would have to be approved by the U.S. Department of Interior.
Kalshi, for instance, saw $230.2 million in activity on Week 11 NFL football alone and an overall $1.3 billion in activity the week of Nov. 3, up from $900 million in the first full week of October.
The Ho-Chunk Nation currently has a lawsuit filed against Kalshi for operating in the state. Several similar lawsuits exist across the country claiming Kalshi is skirting sports wagering laws with its prediction markets.
Both FanDuel and DraftKings recently announced they are quitting the American Gaming Association and will put large investments toward prediction markets in states without legalized mobile sports wagering.
“While we debate a narrow clarification that keeps wagering inside Wisconsin’s compact system, large national platforms are racing to roll out ‘prediction market’ apps that let users trade real-money contracts on sports, politics, and economic data,” August wrote.
August’s memo to fellow lawmakers included a 15-page response to legal questions about the bill from Attorney Ryan Walsh on behalf of the Forest County Potawatomi Community.
He argued the bill doesn’t change anything legally and it just amends the current pacts between tribes and the state, which is allowable.
“In my view, the Bill and associated compacts would not violate any provision of the U.S. Constitution, federal law, or the Wisconsin Constitution and should be upheld in any litigation,” Walsh wrote.
He said that Equal Protection Clause claims that the tribes are being treated differently due to race are no different than the current gambling pacts in the state and that the bill is not the Legislature creating a bill to allow for gambling but instead is simply allowing for an amendment to the agreements already in place.
The Sports Betting Alliance – which represents DraftKings, FanDuel, BetMGM, Fanatics and Bet365 – has said it supports Wisconsin increasing its mobile sports wagering to statewide but believes the state should allow for a change that would allow those companies to work with the tribes and pay less than the 60% of gross revenue required by the Indian Gaming Regulatory Act for its services, an amount that SBA Counsel Damon Stewart said would be too much to allow those companies to operate in the state.
“I think our citizens in Wisconsin are better served by keeping this new platform within our current gambling structure,” Rep. Robert Wittke, R-Caledonia, said as the bill was approved in committee.
