COURTS
New Mexico's AG files suit against sports betting firm Kalshi
Prediction market firm also faces federal suit filed by New Mexico tribes
Published
Modified
New Mexico Attorney General Ra煤l Torrez filed a lawsuit Thursday against New York-based prediction market company Kalshi Inc., alleging the company's sports-betting app functions as a sportsbook in violation of state gambling laws.
The new state lawsuit follows a federal suit filed in May by three New Mexico pueblos and the Mescalero Apache Tribe, alleging Kalshi offers sports betting on tribal lands in violation of federal gambling laws and state-tribal compacts.
The two lawsuits add to a growing list of legal actions nationwide that pit states and tribes against sports-wagering platforms for control of gambling within their jurisdictions.
In similar lawsuits across the U.S., Kalshi has argued that its sports betting contracts are futures trading contracts regulated under the federal Commodity Exchange Act, which preempts state gambling laws and the federal Indian Gaming Regulatory Act.
Kalshi did not immediately respond Thursday to a request for comment about the New Mexico Department of Justice lawsuit.
Kalshi is a contract market regulated by the Commodity Futures Trading Commission. Prediction markets have surged in popularity in recent years, with sites like Polymarket and Kalshi drawing millions of users wagering on everything from sporting events to the Academy Awards.
The NMDOJ lawsuit alleges that Kalshi deceptively offers sports betting under the guise of a prediction market, allowing New Mexicans to place bets on sporting events such as the ongoing NBA finals and the upcoming FIFA World Cup.
"Despite looking like a sportsbook, acting like a sportsbook, and proverbially quacking like a sportsbook, neither Kalshi nor any of its subsidiaries have sought licensure from New Mexico's Gaming Control Board" or abide by the state's gambling laws, the suit alleges.
The lawsuit, filed in 1st Judicial District Court in Santa Fe, asks a judge to find Kalshi in violation of the state Gaming Control Act and bar the firm from offering sports betting in New Mexico. It names as defendants Kalshi Inc. and Kalshiex LLC.
Torrez said in a statement issued Thursday that New Mexico has a "carefully balanced system" for regulating gambling that protects consumers and tribal sovereignty.
鈥淭he only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption, and licenses gaming operators only after they explain how they plan to address compulsive gambling," Torrez said.
"Kalshi has ignored that framework entirely while offering online sports betting within the state," he said. "We are filing this lawsuit to protect the integrity of our laws, our regulatory system, and most importantly, consumers.鈥�
The suit also alleges that the Kalshi app allows anyone 18 and older to place sports bets in violation of the state Gaming Control Act, which prohibits gambling by people under 21.
The Mescalero Apache Tribe and Sandia, Isleta and Pojoaque pueblos filed a lawsuit last month in U.S. District Court in sa国际传媒官网网页入口 alleging that Kalshi operates illegal gambling on tribal lands in violation of the Indian Gaming Regulatory Act and New Mexico's tribal compacts.
The tribes argue that prediction markets divert revenue from tribal governments and encourage underage gambling. Three California tribes filed a similar federal lawsuit last year against Kalshi.
Kalshi has argued that the tribes are improperly using the Indian Gaming Regulatory Act 鈥渢o attempt to regulate trading on an exchange operated from thousands of miles away鈥� under the purview of the federal Commodity Futures Trading Commission.
The New Mexico lawsuits are part of a growing nationwide legal battle over the activities of companies like Kalshi and Polymarket that operate prediction markets that allow people to wager on real-world events.
Rhode Island this week became the seventh state sued by the Commodity Futures Trading Commission and the U.S. Department of Justice over state regulation of prediction markets. Others include Arizona, Connecticut, Illinois, Minnesota, New York and Wisconsin.
Minnesota recently enacted a law, effective Aug. 1, that bans prediction markets like Kalshi and Polymarket from operating within the state.
Both firms have filed federal lawsuits against Minnesota seeking to block the law.
Olivier Uyttebrouck covers the court system. You can reach him at olivier@abqjournal.com.
