Kalshi’s legal team continues to have a heavy workload as the prediction market’s proceedings expand with new lawsuits in New Mexico and Kentucky.
Last week, a consortium of federally recognized tribes in New Mexico filed a lawsuit against Kalshi, alleging the prediction market violates the Indian Gaming Regulatory Act (IGRA) by offering sports event contracts that resemble sports wagers. The tribes also claim Kalshi violates tribal-state gaming compacts by operating Class III gaming on tribal land.
The tribes taking legal action against Kalshi include:
- Pueblo of Isleta
- The Mescalero Apache Tribe
- Pueblo of Pojoaque
- Pueblo of Sandia
In the suit, the four tribes point directly to IGRA for their claims against Kalshi.
The act provides tribes with the right to “regulate all gaming on their Indian lands.” IGRA also mandates that Class III gaming on Indian land is only lawful if “authorized by, among other things, a tribal gaming ordinance or resolution which has been adopted by the tribe with jurisdiction over those lands. . .”
The suit claims the four federally recognized tribes have the right to “extensively regulate gaming” on their Indian lands under the IGRA, providing them with the right to prevent Kalshi from delivering sports event contracts in their respective jurisdictions.
The tribes also cite the Unlawful Internet Gambling Enforcement Act of 2006, an act that bans payments if a bet is not “legal both where it is ‘initiated’ and where it is ‘received.’”
New Mexico tribes say CEA does not matter
The group acknowledges an argument from Kalshi’s previous legal proceedings that the Commodity Exchange Act (CEA) provides the company with the right to offer event contracts under the authority of the Commodity Futures Trading Commission (CFTC).
“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,’” reads the complaint. “The CEA’s only references to ‘gaming’ are (1) the prohibition against the listing of agreements involving gaming as stated in the Special Rule, and (2) the preemption for ‘State or local’ laws governing certain gaming and bucket shops.”
Kalshi is also drawing pushback from the tribes for its availability to U.S. consumers ages 18 and older. Gaming compacts between the tribes and New Mexico only permit gambling by anyone under the age of 21. The provisions conflict with Kalshi’s player account rules, which allow users to create an account if they are 18 or older.
Kalshi legal battles with other state tribes
Kalshi is facing tribal lawsuits in California and Wisconsin.
Tribes in those states are also suing the prediction market for violating IGRA. The suit in Wisconsin, filed by the Ho-Chunk Nation of Wisconsin, also includes false advertising, and racketeering and corruption charges against both Kalshi and Robinhood. The suit alleges the two companies collaborated to offer event contracts on tribal land.
Meanwhile, in California, the group of tribes suing Kalshi was denied a preliminary injunction in November 2025 to prevent Kalshi from offering event contracts on tribal land. The three tribes suing Kalshi in California are:
- Blue Lake Rancheria
- Chicken Ranch Rancheria of Me-Wuk Indians
- Picayune Rancheria of the Chukchansi Indians
Kalshi facing a class action suit in Kentucky
Kalshi’s legal battles continue in a class action lawsuit filed May 11 by state resident and lead plaintiff, Donovan Roberts. The suit seeks recovery of “illegal gambling” losses incurred by trading event contracts through Kalshi’s online platform in the Bluegrass State.
“Defendants attempt to cleverly disguise these contracts as unique securities and/or commodities purportedly regulated by the Commodities Futures Trading Commission; these event contracts are nothing more than thinly veiled illegal wagers based on the outcome of specific future events,” reads the complaint.
In the suit, the plaintiffs provide examples of how Kalshi’s event contracts resemble sports wagers by offering point spread, total combined points, and prop bet markets. The suit mentions Kalshi’s claim that its products are not bets but “futures” and “swaps,” but the plaintiffs argue that the offerings “are simply bets on what will occur in the sporting event.”
The suit also takes issue with Kalshi’s failure to obtain a sports betting license from a state’s gaming regulator, the Kentucky Horse Racing and Gaming Commission. The lack of licensing allows Kalshi to operate without gambling tax obligations in Kentucky.
“Kalshi takes millions out of Kentucky’s economy with this activity every year, all without registering to do business in Kentucky or paying any taxes to the state,” continues the complaint.
The plaintiffs are seeking a refund on losses incurred in the past five years.
Federal judge remands Kalshi suit in Washington
Kalshi is also facing a state-led legal challenge in Washington.
In March, Washington Attorney General Nick Brown sued Kalshi in the U.S. District Court for the Western District of Washington, accusing the prediction market of violating the state’s Gambling Act and Consumer Protection Act. Brown claims Kalshi circumvents state laws by operating as a prediction market and offering illegal gambling.
“Kalshi wants people betting on almost everything possible in life — the outcome of elections, Supreme Court cases, even wars,” said Brown in a press release in March.
Kalshi attempted to move the suit to a Washington federal court, but the effort failed. Last week, the suit was remanded to state court as gambling regulation is a “state” issue.
“It is well established that gambling regulation is within a state’s police powers (and that states have significant social and other interests in regulating such activity),” said U.S. District Judge John C. Coughenour in the order.
Kalshi is appealing the decision and is seeking a stay while the legal proceedings continue. On Monday, Brown filed a request to the U.S. Court of Appeals for the Ninth Circuit to deny Kalshi’s emergency motion for a stay pending appeal.
