Barring an unlikely settlement, a federal court will weigh whether Kalshi’s event contracts related to sports events being traded on tribal lands violate federal law and impugn tribal sovereignty. On Monday, the United States Court for the Western District of Wisconsin denied Kalshi’s motion to dismiss a lawsuit that the Ho-Chunk Nation brought against the exchange platform.
The complaint concerns the Indian Gaming Regulatory Act of 1988 and adds a new dimension to the nationwide dispute over the nature of contracts connected to sports along with which authorities have regulatory powers over their exchange. Because of the importance of the proceedings, multiple stakeholders may weigh in on the lawsuit.
Court finds fault with Kalshi’s arguments for dismissal
The court’s Monday order left no ambiguity as to its opinion on whether the Ho-Chunk Nation has standing to sue Kalshi for what the Ho-Chunk believe are violations of the Indian Gaming Regulatory Act (IGRA) along with its gaming compact with the US Dept. of the Interior and the state of Wisconsin. The ruling affirms that standing in the court’s view, in one regard calling Kalshi’s arguments for the court to dismiss the Ho-Chunk complaint “without basis in the text, legislative history or common sense.”
The Ho-Chunk Nation filed its complaint in November, asking for the court to enjoin Kalshi from offering sports-related designated contract markets (DCMs) on its sovereign lands. While the court denied the request for a preliminary injunction on Monday as well, the possibility remains for that result via the pending trial.
In that trial, the Western District of Wisconsin will be considering many of the same questions of law that numerous federal courts have already examined. Those include whether DCMs pertaining to sports fit the definition of sports wagering under federal law and the Ho-Chunk gaming compact.
Because the plaintiff in this action is a sovereign tribal nation, there will also be novel concepts, like how the Commodity Exchange Act and the IGRA intersect. The result of this trial could influence the actions of other tribal gaming authorities across the nation, so it’s likely that stakeholders across the country will take great interest in the proceedings.
CFTC amicus brief could be forthcoming
The court also granted the requests of multiple parties to file amicus briefs in the litigation on Monday. The parties that requested the leave so far include Ho-Chunk allies.
- 16 federally recognized Indian Tribes
- Arizona Indian Gaming Association
- California Nations Indian Gaming Association
- Indian Gaming Association
- National Congress of American Indians
- Native American Finance Officers Association
- Oklahoma Indian Gaming Association
- Washington Indian Gaming Association
Those interventions could spark similar results on the other side of the dispute. The Commodity Futures Trading Commission (CFTC) has already displayed its desire to support exchanges that it regulates in other lawsuits.
The CFTC is also already active in regard to Wisconsin, within which the Ho-Chunk lands lie. There is an active complaint against the state in which the CFTC is asking the court to enjoin enforcement efforts by Wisconsin state officials.
Wisconsin sued Kalshi and others, arguing that sports-related DCM trading violates state gambling laws. However, Ho-Chunk Nation v. Kalshi has more potential ramifications for tribal lands than the state of Wisconsin outside of Ho-Chunk territory.
If the Ho-Chunk complaint is successful at restricting Kalshi’s operations on Ho-Chunk lands, that creates a limited “blueprint” that other tribal authorities could follow. In that way, the IGRA may prove a more effective tool than state gambling laws for opponents of sports DCM exchanges.
