The Indian Gaming Association (IGA) has called on tribes to add their voice against Kalshi in the case against the prediction markets operator in New Jersey.
Posted on pechanga.net, the IGA states that, “Unless acted upon, the number of sports-based event contracts traded on the Derivatives/Futures market is only expected to grow, ushering in growing reason for concern for tribal gaming operators and regulators across the United States.
“It will be crucial moving forward for Tribal governments to closely follow this matter as it evolves in the CFTC and in the courts.”
It then posts a link to a brief, urging tribal leaders to add their signatures to the draft. In the brief, it states, “Contrary to Kalshi’s arguments: (1) the CEA does not govern its gaming-related sports event contracts, (2) such contracts are expressly prohibited by the CEA and Commodity Futures Trading Commission’s (“CFTC”) own regulations, and (3) federal, state, and tribal gaming laws therefore apply to the contracts (including IGRA).”
Kalshi’s legal victories
Kalshi has scored legal victories in courts by asserting that the CFTC holds exclusive jurisdiction over its operations and that sports event contracts are legal under the Commodity Exchange Act (CEA). A judge in Nevada ruled in the company’s favor, and a judge in New Jersey also granted a preliminary injunction, which allows the platform to continue operations in the state.
The legal debate centres around whether the markets are classified as sports betting or prediction markets. It is a fine line, and Kalshi argues that its markets are valid as prediction markets as they have “real-world financial consequences”.
Is Kalshi facilitating betting?
In court, the company has been careful to note that it does not offer “betting”, but the IGA argues in its brief that the company has frequently used the term in promotions. It states, “In fact, Kalshi has repeatedly referred to its own sports event contracts as “bets” or “sports betting.” Kalshi’s sports event contracts therefore clearly constitute sports betting and are thus Class III gaming under IGRA.”
A promotion by Kalshi used the line, “Breaking News: You can now bet on sports in all 50 states with Kalshi.” The company began offering sports-related markets in January this year, and as they became popular has expanded its offerings. Now, as much as 80% of all markets on the platform are sports-related.
Additionally, other prediction market sites such as Crypto.com have increased markets on sports, and you can now “bet” on NHL, NBA, MLB, and NFL matches on the sites.
Kalshi claimed previously in court that it would draw the line at offering prop bets, but as courts continue to side with the company, and the CFTC also shows no signs of intervening against the spread of the markets, expansion looks likely in the future.
Incoming chair of the CFTC and current Kalshi board member, Brian Quintenz, recently commented that tribes could open up their own prediction market sites if they wish. That is unlikely to have gone down well with the tribes, and the IGA concludes its call for support by writing, “every sports event contract that is traded on tribal land or in violation of a Tribal-State compact deprives tribes and states of revenue that our communities rely upon”.
The debate looks set to rumble on and all eyes will be on the judge decisions in the open cases Kalshi has in Nevada, New Jersey, and Maryland.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
