Kalshi has been sued by four Native American tribes in New Mexico over claims the prediction-market platform is illegally offering sports betting, including to people under 21, in violation of the Indian Gaming Regulatory Act.
The lawsuit was lodged Tuesday in New Mexico federal court by the following tribes: Mescalero Apache Tribe, Pueblo of Isleta, Pueblo of Pojoaque, and Pueblo of Sandia. The suit alleges that Kalshi has been violating their respective gaming compacts and ordinances. It cites IGRA, a federal law that was signed into law by President Ronald Reagan in 1988 that permits federally recognized Native tribes to operate gaming facilities on tribal lands, but only under certain conditions.
“Under IGRA, Indian tribes regulate all gaming on their Indian lands,” the complaint says.
It represents the third Native American lawsuit filed against Kalshi; the company has also been sued by tribes in California and Wisconsin. The Wisconsin case is particularly relevant to the claims made in New Mexico—in that case, on May 11, the judge ruled that the Ho-Chunk Nation can pursue its claim that Kalshi violated IGRA, and said Congress passed the law to ensure “Indian tribes have the exclusive right to regulate gaming activity on Indian lands.”
Although that was a preliminary ruling and the Ho-Chunk Nation must still win the case on its merits, U.S. gaming attorney Dan Wallach said on social media the decision “may have opened the floodgates.”
The New Mexico suit downplays the prediction-market industry talking point that users are betting against each other and not the “house” like with traditional sportsbooks, saying that under IGRA, the existence of a “house” is irrelevant to whether something qualifies as “gaming.” The suit also says it doesn’t matter where Kalshi’s servers are located—it claims if a user is on tribal lands while wagering on sports using the Kalshi app, the law is being broken.
The lawsuit also claims that Kalshi is violating each tribes’ own gaming laws by allowing 18-year-old users to put money on sports on tribal lands; each tribe “prohibits gaming by people under the age of 21.”
The tribes also discount the argument that a different federal law, the Commodity Exchange Age, means sports event contracts are permitted and exclusively policed by the Commodity Futures Trading Commission. “The CEA does not abrogate, repeal, or limit IGRA or tribal gaming authority or ordinances, since it does not reference them or even use the words ‘Indian’ or ‘tribe.’”
The suit does not seek a specific amount of damages, although it wants Kalshi to pay for each violation of tribal laws that has occurred. It cites as an example the Mescalero Ordinance, which features civil fines of $5,000 per day, per violation, plus punitive damages.
Representatives for the tribes did not immediately respond to a request for comment, and Kalshi declined to comment.
The CFTC Says It Meets ‘Regularly’ With Tribal Leaders
CFTC chairman Michael Selig has been touting his agency’s exclusive jurisdiction over prediction markets, even going as far as to sue five states that have made efforts to prohibit platforms from offering sports. Last month, Selig told Front Office Sports his agency “regularly” meets with tribal leaders.
“That’s certainly a constituency we care a lot about and want to make sure we’re hearing their views,” he said during the interview.
James Siva, chairman of the California Nations Indian Gaming Association (CNIGA) and vice chairman for the Morongo Band of Mission Indians in Cabazon, Calif., told FOS last month that he has talked to Selig, who “fully” believes the CFTC has exclusive jurisdiction over prediction markets. “I had a Zoom call with Selig, and he told me that verbatim. He was very careful to use the term ‘exclusive authority’ several times.”
The CFTC is in the process of putting together new rule proposals to govern prediction markets. Many of the pro leagues have weighed in, and Selig told FOS the regulator would move “aggressively” to propose rules; he didn’t rule out the possibility that prediction-market rulemaking could include restrictions, or even bans, on prop bets and parlays.
Kalshi is fighting dozens of lawsuits. Some were filed by the platform against state gambling regulators, while others are proposed class action lawsuits filed by consumers against the company. Kalshi first began offering sports event contracts in January of last year.
