Four New Mexico tribes filed a lawsuit against Kalshi on Tuesday, claiming that the prediction market exchange offers “illegal gambling” to individuals who are located within Native American territories.
The suit, which is similar to pending legal action by the Wisconsin Ho-Chunk Nation against Kalshi, cites the Indian Gaming Regulatory of 1988 along with state-based compacts to make its case against the prediction market app.
The plaintiffs in the new lawsuit are the pueblos of Pojoaque, Sandia, and Isleta, along with the Mescalero Apache Tribe. The tribes are asking the US District Court for injunctive relief plus civil penalties against Kalshi.
READ: New Mexico Tribes v. Kalshi (full text: May 12, 2026)
Unlike the prediction market legal battle that pits state gaming regulators against the federal government (in which the CFTC can rely on the Supremacy Clause to bolster its argument for “exclusive jurisdiction”), tribal actions against exchanges present a unique legal dilemma.
On one hand, the Commodity Trading Futures Commission is a federal agency with nationwide oversight authority on derivative swaps. On the other hand, tribal gaming interests are backed by another federal law: the Indian Gaming Regulatory Act of 1988.
Since the late 1980s, IGRA has allowed tribal communities across the country to operate casinos and offer a wide variety of gaming products to individuals who reside in or visit tribal lands. Since the 2018 US Supreme Court repeal of PASPA, states have secured compacts with Native American communities to either include tribes as operators or geo-fence their territories from commercial sportsbook apps.
Arguably, both tribal gaming and the CFTC enjoy federal regulatory oversight status of exchange-based activity, especially when it revolves around predicting the outcomes of sports contests. That argument, according to some legal experts, will likely be resolved by SCOTUS at some point in the future.
The recent lawsuits filed by tribes against prediction markets like Kalshi bring into focus the zero-sum nature of regulating any type of gaming, swaps, derivatives, or forecasting operators. Who gets taxed, and who benefits from those taxes is one facet; one that is often defined by which governing body can legally assume a position of regulatory oversight.
However, programs and initiatives created or maintained through gaming or trading revenue can frequently become a foundational aspect of cultural Zeitgeist for one or more conflicting parties. The three main contestants in the battle over who ultimately regulates prediction markets are states, tribes, and the federal government. And all three continue to make their respective legal cases as to why they should control the formal licensing of online gaming and/or sports trading products.
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