New Mexico Tribes Sue Prediction Market, Seek Online Sports Betting Rights

Four Native American tribes in New Mexico have initiated legal proceedings against the online prediction market Kalshi, asserting that its operations violate federal and tribal gaming laws. The tribes are also advocating for the renegotiation of their gaming compacts to secure exclusive rights to online sports betting within the state.

Tribal Complaint Filed

The Mescalero Apache Tribe, Pueblo of Isleta, Pueblo of Pojoaque, and Pueblo of Sandia jointly filed a 34-page complaint in New Mexico’s federal court. They allege that Kalshi, and similar prediction markets offering contracts on sports events, are operating in violation of established federal, state, and tribal gaming regulations.

The core of the tribes’ argument is that they hold exclusive rights to all forms of gaming on their sovereign lands, as authorized under the Indian Gaming Regulatory Act (IGRA). They contend that Kalshi’s continued operation, accessible online and on tribal properties, infringes upon their federally and state-approved Class III gaming compacts.

Legislative Push for Online Betting

Parallel to the legal action, a state lawmaker has proposed a significant shift in New Mexico’s gaming landscape. State Representative John Block (R-Alamogordo), a member of the joint Indian Affairs Committee, has suggested reopening the Class III gaming compacts for the state’s 17 gaming tribes. The proposed renegotiation would aim to incorporate online sports betting.

Block expressed concern that illegal online operations are already depriving the state, tribes, and citizens of potential tax revenue. He believes that expanding tribal compacts to include online sports betting would be a logical step, especially if online platforms are already accessible within the state.

Kalshi’s Defense

Kalshi has responded to the lawsuit by filing a motion to dismiss the tribes’ claims. The prediction market’s primary defense hinges on a landmark 1981 U.S. Supreme Court ruling, Montana v. United States. This precedent significantly limits the regulatory authority of Indian tribes over non-member businesses operating within reservation boundaries.

Kalshi argues that the tribes’ sovereign powers do not extend to the activities of non-members like Kalshi, which operates as a nationwide, federally regulated exchange overseen by the Commodity Futures Trading Commission (CFTC). The company contends that subjecting it to tribal jurisdiction would contravene established law and create an unmanageable regulatory environment for national exchanges.

Future of Gaming Compacts

The path to renegotiating tribal compacts in New Mexico involves agreement from both the tribes and Governor Michelle Lujan Grisham (D). Any proposed changes would then require approval from the state legislature. While the New Mexico Legislature has adjourned for 2026, the governor has the authority to call an emergency session.

The current Class III gaming compacts in New Mexico permit only in-person sports betting on tribal lands. The tribes’ lawsuit and Representative Block’s proposal signal a growing interest in expanding these offerings to the online realm, a move that could significantly reshape the state’s gaming industry.

Key facts

The developments in New Mexico are significant for video poker enthusiasts and the broader online gaming community as they highlight ongoing legal and legislative battles over gaming rights and the expansion of sports betting. The outcome of this lawsuit and any potential renegotiation of tribal compacts could set precedents for how online gaming, including but not limited to sports betting, is regulated and accessed in tribal territories across the United States.

Source: Casino.org News, https://www.casino.org/news/new-mexico-tribes-want-sports-prediction-markets-shut-down-or-sports-betting-rights-expanded/