'Chair of Indian Gaming Association expresses displeasure towards Kalshi CEO'
In the realm of prediction markets, the legal status of the company Kalshi is currently under contention, particularly in relation to tribal gaming sovereignty.
Kalshi operates as a designated contract market (DCM) under the Commodity Futures Trading Commission (CFTC), claiming federal authority under the Commodity Exchange Act (CEA) to offer sports event contracts nationwide without state licenses. However, this federal preemption argument has faced challenges in recent times.
A significant legal setback occurred in Maryland, where a federal judge, Adam B. Abelson, ruled against Kalshi. The judge denied Kalshi’s preliminary injunction against the Maryland Lottery and Gaming Control Commission, affirming that Kalshi must comply with Maryland’s state gambling laws and cannot operate freely under federal authority alone.
Regarding tribal gaming and sovereignty, the Maryland ruling and related legal analysis highlight a significant issue: Kalshi’s expansive interpretation that the CEA preempts state gambling laws could potentially infringe upon tribal regulatory authority, specifically the Indian Gaming Regulatory Act (IGRA) and the Wire Act. The IGRA establishes a comprehensive regulatory framework for tribal gaming on tribal lands, recognizing tribal sovereignty in this sphere. The Wire Act prohibits the interstate transmission of bets or wagers through wire communications.
Courts appear cautious about accepting Kalshi’s expansive preemption theory because it potentially infringes upon tribal sovereignty as established under the IGRA and protects tribal gaming operations from federal overrides. The ongoing legal battle is expected to progress through appeals, potentially reaching the Supreme Court, which may clarify the interplay of federal regulation, state law, and tribal sovereignty in gambling and prediction markets.
It's important to note that more than 60 tribal governments and organizations, including the IGA and the California Nations Indian Gaming Association (CNIGA), have filed an amicus brief in a federal appeals court supporting New Jersey's legal battle against Kalshi. These tribal groups argue that allowing Kalshi to bypass state gambling laws through CEA protections would cause broad harm to tribes across the country who operate gaming under the federal Indian Gaming Regulatory Act (IGRA).
Kalshi maintains that its platform is legal and distinct from traditional sports betting. However, the company's interpretation of the CEA and its implications for tribal gaming sovereignty continue to spark debate and concern among tribal groups and state officials.
This article was last updated on June 24, 2025, at 09:17h, and was first posted on June 24, 2025, at 04:50h.
[1] Maryland Court Ruling Against Kalshi [2] Tribal Groups File Amicus Brief Against Kalshi [3] CFTC's Lawsuit Against Kalshi [4] Legal Analysis on Kalshi's Preemption Claim
- The Maryland court ruling against Kalshi affirmed that Kalshi must comply with Maryland's state gambling laws, implying potential challenges to Kalshi's operations under the Commodity Exchange Act (CEA) in relation to tribal gaming sovereignty.
- More than 60 tribal governments and organizations, including the Indian Gaming Association (IGA) and the California Nations Indian Gaming Association (CNIGA), have submitted an amicus brief in a federal appeals court, expressing concerns that Kalshi's interpretation of the CEA may infringe upon tribal regulatory authority as outlined in the Indian Gaming Regulatory Act (IGRA).
- In the context of prediction markets, the ongoing legal battle between Kalshi and various state authorities, such as the Maryland Lottery and Gaming Control Commission, is expected to clarify the interplay of federal regulation, state law, and tribal sovereignty in casino-and-gambling operations.
