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New Mexico tribes sue Kalshi, alleging illegal sports betting on tribal lands
The lawsuit was filed by the Mescalero Apache Tribe and Sandia, Pojoaque and Isleta pueblos
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Three New Mexico pueblos and the Mescalero Apache Tribe filed a federal lawsuit on Tuesday against New York-based prediction market company Kalshi Inc., alleging the firm鈥檚 sports-betting app operates illegally on tribal lands in violation of federal gaming law and tribal-state compacts.
The tribes say Kalshi is exploiting a legal loophole 鈥� marketing sports wagers as financial derivatives to dodge tribal and state regulators 鈥� and that its app lets anyone 18 and older bet on games even though the Indian Gaming Regulatory Act and tribal gaming laws allow gaming on Indian lands by those 21 or older.
The federal lawsuit was filed in U.S. District Court in Albuquerque by the Mescalero Apache Tribe and the Sandia, Isleta and Pojoaque pueblos. Kalshi didn鈥檛 immediately respond to a request for comment.
The lawsuit draws New Mexico into a nationwide legal battle between sports-wagering platforms and states and tribes over control of gambling within their jurisdictions.
In other legal actions, Kalishi has argued that sports-betting contracts are considered 鈥渟waps鈥� under the federal Commodity Exchange Act and preempts the Indian Gaming Regulatory Act and state gambling laws, permitting Kalshi to offer sports betting.
Kalshi is a contract market regulated by the Commodity Futures Trading Commission. Prediction markets have surged in popularity in recent years, with sites like Polymarket and Kalshi drawing millions of users wagering on everything from presidential elections to the Academy Awards, as well as sports.
In a statement, Duane Duffy, a vice president with the Mescalero Apache Tribe, said the tribes 鈥渃annot sit by idly as the laws that enshrine this right are ignored.鈥�
鈥淭ribes fought hard to protect their inherent sovereign right to operate and regulate casinos on tribal lands,鈥� Duffy added.
Pueblo of Sandia Governor Stuart Paisano said prediction markets used for sports betting diverts 鈥渆ssential revenue away from our governments, provides an end-run around regulation of gaming on our lands, and allows gaming by underage people.鈥�
The lawsuit contends that IGRA applies to internet gambling if the bettor 鈥渋nitiates bets or wagers while physically located in Indian lands,鈥� regardless of the location of servers where the bets are processed.
The suit asks a federal judge to order Kalshi to end internet-based sports betting on tribal lands and pay undisclosed damages.
鈥淯nder IGRA, Indian tribes regulate all gaming on their Indian lands,鈥� including pari-mutuel betting on horse races and sports betting, the suit contends. The 1988 federal law also envisioned changes in technology to allow tribes 鈥渢o take advantage of modern methods鈥� through 鈥渢elephone, cable, television or satellite,鈥� it argues.
Tribes and pueblos also regulate gambling activity since the 1990s under gaming compacts with the state that prohibits internet gaming on tribal lands, the suit said.
The suit from the New Mexico tribes follows another federal lawsuit filed by three tribes in California last year against Kalshi, alleging the firm engaged in illegal sports gambling on trial lands. The California suit also argues that Kalshi violates provisions of the Indian Gaming Regulatory Act.
Kalshi argued in a March 16 response to that California lawsuit that IGRA focuses on gaming activity 鈥渓ocated鈥� or 鈥渃onducted鈥� on reservations and 鈥渄oes not address internet activity at all.鈥�
Kalshi also argued that the tribes are improperly using IGRA 鈥渢o attempt to regulate trading on an exchange operated from thousands of miles away.鈥�
If successful, the California suit 鈥渨ould seriously disrupt a national derivatives market鈥� regulated by the federal Commodities Futures Trading Commission under the authority of the Commodity Exchange Act, Kalshi argued.
You can reach Olivier Uyttebrouck at olivier@abqjournal.com and Matthew Narvaiz at mnarvaiz@abqjournal.com.
