New Mexico Tribes Sue Kalshi Over Sports Betting Contracts

Kalshi New Mexico operations are under fire as four tribes filed a federal lawsuit against the prediction market company, claiming its sports betting contracts constitute illegal online gambling on tribal lands. The tribes argue the products qualify as Class III gaming under the Indian Gaming Regulatory Act and require tribal authorization. Specifically, the complaint alleges Kalshi never obtained tribal licenses and permits wagering by users as young as 18, violating tribal gaming agreements that prohibit Class III gaming for anyone under 21. The tribes claim Kalshi’s daily transaction volume surged from just over $4 million in December to roughly $800 million after introducing sports betting contracts, with reports valuing the company at about $22 billion.

The Tribes’ Legal Claims Against Kalshi

The Mescalero Apache Tribe, Pojoaque Pueblo, Sandia Pueblo, and Isleta Pueblo filed the complaint through a Washington-based law firm, asserting that Kalshi violated the Indian Gaming Regulatory Act by operating on tribal lands without proper authorization. The tribes contend the prediction market operator infringes on tribal rights to self-determination that the United States Supreme Court first recognized in 1987. The lawsuit specifically alleges Kalshi could and should have implemented geofencing technology to prevent its app from functioning within tribal boundaries.

These New Mexico tribes join a broader coalition challenging prediction markets across multiple states. Similarly, the Ho-Chunk Nation in Wisconsin filed suit against Kalshi, with U.S. District Judge William M. Conley ruling the tribe demonstrated a likelihood of success on the merits. The judge rejected Kalshi’s argument that its New York headquarters and off-reservation servers exempt it from IGRA jurisdiction. In addition, Blue Lake Rancheria in California initiated legal action against the platform.

The tribes argue Kalshi siphons gaming revenues essential for schools and community services. In the last quarter of 2025, 14 tribes and pueblos in New Mexico generated more than $266 million in adjusted net win from gaming operations. Kalshi counters that the Commodity Futures Trading Commission’s authority under the Commodity Exchange Act overrides IGRA.

Kalshi’s Sports Betting Contracts Under Scrutiny

Kalshi operates as a peer-to-peer exchange where users trade event contracts directly with each other rather than betting against the house. The platform charges transaction fees instead of taking positions on outcomes, a model the company claims distinguishes it from traditional sportsbooks. Event contracts function as yes-or-no propositions priced between $0.01 and $0.99, settling at $1.00 if correct or $0.00 if wrong.

Sports markets drove explosive growth for Kalshi. Monthly trading volume surged from $180 million at the start of 2025 to $14.4 billion in March 2026, with sports accounting for 68% of total volume. Basketball generated 44% of sports activity, followed by football at 28%. The platform reached $4 billion in seven-day trading volume, with $1 billion stemming from parlay contracts.

State regulators and watchdog groups reject Kalshi’s distinction from gambling. Kentucky Representative Michael Meredith stated the platform represents sports wagering that should follow state regulations. The American Gaming Association estimates states lost over $570 million in tax revenues since prediction markets began offering sports contracts. Better Markets director Benjamin Schiffrin noted Kalshi allows betting on game outcomes, point spreads, and player performance identical to traditional sportsbooks. A bipartisan coalition of attorneys general from 39 states urged federal courts to uphold state authority over sports gambling.

Growing Legal Battles Threaten Tribal Gaming Sovereignty

Federal courts delivered conflicting decisions on Kalshi’s legal standing. The U.S. 3rd Circuit Court of Appeals upheld a ruling allowing Kalshi to offer sports betting contracts in New Jersey, finding state gambling bans are preempted by federal law governing securities. Judge Jane Richards Roth dissented, arguing Kalshi used “performative sleight” to rebrand sports bets as futures trades. Correspondingly, the federal government sued Arizona, Connecticut, and Illinois to block state enforcement actions against prediction markets.

A Wisconsin federal judge ruled differently. U.S. District Judge William M. Conley found the Ho-Chunk Nation demonstrated a strong likelihood of succeeding in stopping Kalshi from offering sports contracts on tribal land. The decision contrasted with California outcomes where tribes failed to secure injunctions.

The conflict centers on whether the Commodity Futures Trading Commission’s authority under the Commodity Exchange Act overrides the Indian Gaming Regulatory Act. Senator Catherine Cortez Masto and six colleagues warned the CFTC against permitting companies to categorize sports betting as event contracts, stating the agency is “expressly prohibited from allowing event contracts that involve gaming”.

Victor Rocha of the Indian Gaming Association stated tribal leaders found discussions with Kalshi CEO Tarek Mansour disingenuous. More than 60 tribes filed an amicus brief supporting New Jersey’s litigation, arguing prediction markets undermine tribal sovereignty and bargained-for compacts.