Kalshi is the target of another involving the availability of its prediction market exchange on tribal lands, this time in the United States District Court for New Mexico. The arguments are similar to those that previous complaints have leveraged regarding tribal sovereignty along with the intersection of the Commodity Exchange Act and the Indian Gaming Regulatory Act.
Days after the tribal coalition filed its complaint, the US District Court for the Western District of Washington refused a request by Kalshi to move the case involving Washington’s lawsuit against Kalshi to that court. That litigation has Kalshi before the US Ninth Circuit Court of Appeals again.
New complaint centers tribal sovereignty and sports contract trading
On May 12, the tribal coalition filed Mescalero Apache Tribe et al. v. Kalshi, “to impose civil penalties for operating Class III gaming activities on the Tribes’ respective Indian lands in violation of their respective tribal-state gaming compacts and their respective federally approved gaming ordinances as made enforceable under the Indian Gaming Regulatory Act (‘IGRA’).” The complaint contains two significant requests of the court.
The first is for the court to “declare that Kalshi’s offer and operation of internet-based sports betting for individuals located on the Tribes’ respective Indian lands is unlawful class III gaming in violation of IGRA and the Tribes’ respective Compacts, Ordinances, and Regulations.” In simpler language, the coalition wants the court to declare that trading contracts on Kalshi related to sporting events on tribal lands is tantamount to illegal gambling.
The other primary petition is for the court to “preliminarily and permanently enjoin Kalshi from offering internet-based sports betting for individuals located on the Tribes’ Indian lands.” Under such an order, Kalshi would need to geofence the tribes’ territories out of their addressable market, but perhaps only for trades connected to sporting events.
The complaint resembles a lawsuit in the US District Court for the Western District of Wisconsin, which granted the Ho-Chunk Nation leave to pursue that action earlier in May. In both courts, judges will need to evaluate interactions between the IGRA and the Commodity Exchange Act (CEA), which is the federal legislation governing commodity trades.
Kalshi has not yet responded to Mescalero, but will likely move to dismiss the case. Further west, counsel for Kalshi is asking the Ninth to intervene in a separate dispute between Washington and itself.
Ninth Circuit fields another emergency stay request from Kalshi
In the early stages of the litigation, Washington’s civil lawsuit against Kalshi is going well for the state. Kalshi’s attempt to remove the case from state court to federal court was denied, leaving Kalshi in a position to appeal that decision to the Ninth.
Kalshi has requested an emergency stay from the Ninth, essentially asking the court to block the state trial from moving forward while its appeal of the petition to remove the case to federal court plays out. In its Monday response to that emergency stay request, Washington pointed out a pertinent fact.
The Ninth fielded a similar request from Kalshi in its dispute with Nevada and refused that petition. The facts of the Washington case may be too similar to affect a different decision from the Ninth. The litigation in Nevada state court has not gone well for Kalshi, with Kalshi being ordered to geofence the state out of its operations by a state judge. So far, Kalshi’s efforts to prevent the same thing from playing out in Washington are not succeeding.
