Add New Mexico to the growing list of states taking legal action against Kalshi for allegedly offering sports event contracts that constitute illegal online sports betting.
On Thursday, New Mexico Attorney General Raúl Torrez filed a state court lawsuit against the company, alleging that the prediction market platform “plays the same role as a traditional sportsbook” without holding a gaming license from New Mexico’s Gaming Control Board.
“The only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption, and licenses gaming operators only after they explain how they plan to address compulsive gambling,” said Torrez in a press release.
“Kalshi has ignored that framework entirely while offering online sports betting within the state. We are filing this lawsuit to protect the integrity of our laws, our regulatory system, and most importantly, consumers.”
What are New Mexico’s complaints against Kalshi?
In addition to Kalshi not holding a gaming license in New Mexico, Torrez also alleges that:
- Kalshi violates state law by offering illegal gambling to residents aged 18 to 20 years old
- The company has been offering “sports betting” in New Mexico since January 2025
- As of May 13, about 87% of Kalshi’s event contracts nationwide are tied to sports
Torrez notes Kalshi’s portfolio of products for sports event contracts, with over/under, moneyline and prop bet markets available for trading on the prediction market. He claims Kalshi’s sports event contract operations mirror the role of a traditional sportsbook by offering wagerable markets while also retaining a fee for the services.
“Both Kalshi and a sportsbook serve as a sophisticated counterpart sitting between bettors, setting terms, deciding outcomes, and collecting a commission for each sports bet placed,” continues the complaint.
New Mexico tribes have also sued Kalshi
In the lawsuit, Torrez emphasizes his belief that Kalshi’s offering of sports violates tribal sovereignty and tribal-state gaming compacts in New Mexico.
The Santa Fe court lawsuit is not the only legal action the company is facing in the state. A few weeks ago, four New Mexico tribes united to sue Kalshi in federal court, alleging that its sports event contracts violate the Indian Gaming Regulatory Act (IGRA) and gaming compacts.
Kalshi makes changes to marketing language
The complaint points to recent efforts by Kalshi to separate its product from gambling. Earlier this week, the prediction market filed paperwork with the United States Patent and Trademark Office that no longer uses “gambling” language to describe the platform.
Kalshi previously labeled its products as gambling in a trademark filing in April. The prediction market has also used the language in marketing, as also cited in Torrez’s lawsuit:
“Against a backdrop of mounting litigation and regulatory challenges, Kalshi has dropped references to sports betting from its advertising and has instead leaned full throttle into its self-created brand as a ‘prediction market’ offering individuals the ability to purchase ‘event contracts,’” reads the complaint.
“Despite this marketing maneuver, Kalshi continues to operate as a digital platform for sports betting and continues to operate unlawfully within New Mexico.”
SBC Americas reached out to Kalshi for comment on Torrez’s suit in New Mexico.
New Mexico joins other states in the fight against Kalshi
Kalshi has active legal proceedings in states across the country. The prediction market is also facing civil and/or criminal action from key stakeholders in government.
Most recently, Rhode Island Attorney General Peter Neronha filed a lawsuit in May against each of Kalshi and Polymarket. Nerona sued the companies less than a week after Kalshi took preemptive legal action in the Ocean State by filing a lawsuit against the AG and other state officials.
Other states where Kalshi is dealing with lawsuits from government leaders include:
- Arizona
- Massachusetts
- Michigan
- Nevada
- Washington
Arizona AG Kristen Mayes was the first AG to file a criminal complaint against Kalshi. Mayes is pursuing 20 criminal misdemeanor charges against Kalshi for its event contracts.
CFTC could intervene in New Mexico suit
Torrez’s suit against Kalshi could lead to intervention by the Commodity Futures Trading Commission (CFTC), the federal regulator of prediction markets.
The CFTC responded to Neronha’s lawsuit against Kalshi by filing a motion to intervene in the legal proceedings. The agency is suing the AG and Rhode Island Lottery Director Mark Curcolo over legality and regulatory concerns related to sports event contracts.
The CFTC has also filed civil suits against AGs and other government leaders in:
- Arizona
- Connecticut
- Illinois
- Minnesota
- New York
- Wisconsin
