A federal judge in Wisconsin has permitted the Ho-Chunk Nation to advance its claims under the Indian Gaming Regulatory Act (IGRA) against Kalshi, reinforcing the argument that prediction markets on tribal lands may be subject to IGRA regulations.
This decision marks a significant legal win for Native tribes, as the court recognized that the Ho-Chunk Nation presented credible allegations regarding unauthorized Class III gaming through Kalshi’s sports event contracts on tribal territory, which contravenes IGRA, local gaming laws, and the tribe's agreement with the state of Wisconsin.
U.S. District Judge William Conley acknowledged the tribe's assertions of IGRA violations, dismissing Kalshi’s claim that tribes do not possess the legal standing to sue third-party operators under IGRA.
In his ruling, Judge Conley referenced the legislative history of IGRA, noting that Congress aimed to empower U.S. district courts to intervene in illegal gaming activities on Indian lands.
Kalshi's argument that its operations, based in New York with servers located elsewhere, should exempt it from regulations concerning Indian lands was also rejected. The court emphasized that the location of online gaming activities is determined by the bettor's physical presence, not the server locations.
Another critical aspect of the ruling was Kalshi's reliance on the Unlawful Internet Gambling Enforcement Act (UIGEA), which the company claimed protected its online event contracts from tribal gaming oversight. Judge Conley firmly dismissed this interpretation, stating that the UIGEA does not legalize sports betting contracts anywhere, especially on Indian lands where such activities are explicitly banned.
Moreover, the court characterized UIGEA as a law focused on payment processing, designed to prevent certain financial transactions from funding already illegal gaming activities, rather than legalizing gambling or overriding other gaming regulations, including IGRA.
Conley stressed that Congress made it clear that UIGEA should not alter or affect the enforcement of IGRA.
While the judge did not fully resolve the question of whether the Commodity Exchange Act (CEA) preempts tribal gaming regulations, he concluded that Kalshi did not sufficiently prove that CEA clearly supersedes IGRA.