The state of New Mexico has initiated legal action against Kalshi, a prediction market operator, following a federal challenge from four tribes in the region. This lawsuit is part of New Mexico's ongoing efforts to regulate sports event prediction markets more strictly.
The New Mexico Department of Justice claims that Kalshi is engaging in illegal online sports betting, thereby violating the state's gaming regulations and tribal gaming agreements. Attorney General Raúl Torrez stated that the lawsuit is intended to uphold the integrity of the state's legal framework and protect consumers.
Torrez emphasized the importance of New Mexico's well-established system for gaming regulation, which is designed to safeguard consumers, ensure accountability, and honor tribal sovereignty.
The state is seeking a court order to prevent Kalshi from offering sports-related contracts within its jurisdiction. The complaint characterizes Kalshi as functioning similarly to a sportsbook, despite its different branding.
The lawsuit argues that Kalshi engages in activities typical of a sportsbook, such as accepting bets, managing transactions, determining outcomes, and collecting fees. It also highlights Kalshi's past marketing efforts, which presented the platform as a legal sports betting option across the United States.
Examples from the complaint showcase advertisements calling Kalshi “The First Nationwide Legal Sports Betting Platform” and claiming “Sports Betting Legal in All 50 States on Kalshi.” Furthermore, Kalshi's offerings are said to be comparable to traditional betting options like moneyline, point spread, and parlay wagers.
Another point of contention is Kalshi's age policy, which permits users aged 18 to 20 to register, while New Mexico law mandates that gamblers be at least 21 years old.
State attorneys argue that Kalshi has circumvented the licensing process required for gaming operators in New Mexico, which includes implementing responsible gambling measures.
The lawsuit also underscores the importance of New Mexico's tribal gaming framework, stating that sports betting is currently governed by tribal-state compacts. The state contends that Kalshi's operations undermine this system.
This legal action follows a recent federal lawsuit filed by four New Mexico tribes—the Mescalero Apache Tribe, Pueblo of Isleta, Pueblo of Pojoaque, and Pueblo of Sandia—against Kalshi, alleging violations of the Indian Gaming Regulatory Act (IGRA) and tribal gaming agreements when trades occur on tribal lands. Similar lawsuits have been filed by tribes in California and Wisconsin, with a federal judge in Wisconsin recently allowing claims to proceed.