Kalshi asserts Tribal governments have ‘no power to regulate’ prediction markets

As part of a request to dismiss a lawsuit filed by multiple New Mexico Tribes, Kalshi stated such communities have “no power to regulate” prediction markets given their inherent sovereignty “does not extend” to the conduct of nonmembers. 

"The inherent sovereign powers of an Indian Tribe do not extend to the activities of nonmembers of the Tribe. No tribe can enforce its laws against a party it has no power to regulate. If the Court were to permit Plaintiffs to exercise regulatory authority over Kalshi, hundreds of other Tribes could too,” Kalshi said. 

"Kalshi is not a member of the Tribes. Under Montana v. US – a decision the Complaint conspicuously declines to confront – a Tribe’s inherent sovereignty does not extend to the conduct of nonmembers."

The operator is seeking a dismissal of a lawsuit filed against Kalshi by multiple Tribes in New Mexico, which alleges that offering sports-related event contracts on Tribal lands violates the Indian Gaming Regulatory Act (IGRA).

Previously, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against the state of New Mexico, seeking a permanent injunction to prevent legislators from enforcing preempted state laws against its registrants.

While the CFTC’s enforcement action was in relation to the New Mexico Department of Justice and Attorney General Raúl Torrez’s lawsuit against Kalshi, the Commission would likely seek a ruling which grants federal oversight for prediction markets in both cases. 

The motion also states the CFTC's notice of proposed rulemaking “recognizes the role of Tribes in regulating gaming, but it also makes clear that 'event contracts traded as swaps or futures contracts… are subject to the (CFTC)’s exclusive jurisdiction.’”

Kalshi CEO Tarek Mansour recently confirmed that the operator is in the “early stages” of developing an initial public offering (IPO), which could be introduced by late 2027 or early 2028. 

A noteworthy detail of Kalshi’s early IPO stages was the operator requesting that prospective bank advisers integrate within its platform, which would then provide institutional clients with direct trading access.