Securities Regulation Daily Wrap Up, FEDERAL PREEMPTION—D.N.M.: New Mexico tribes argue that tribal gaming laws apply to Kalshi’s prediction markets, (Jul 24, 2026)
Law Firms Mentioned:Rey-Bear McLaughlin, LLP | Snell & Wilmer L.L.P.
Organizations Mentioned:Kalshi, Inc. | Snell & Wilmer, LLP
The tribes said that being prevented from enforcing tribal gaming laws would cause irreparable injury by invading tribal sovereignty and self-governance.
Four New Mexico tribal groups defended their lawsuit against the Kalshi exchange, arguing in a new court filing that a proposed CFTC regulation does not override tribal gaming laws as to regulation of prediction markets like Kalshi. The tribes contended that no federal laws regarding event contract trading preempt the tribes’ exclusive right to regulate gaming on Indian lands (Mescalero Apache Tribe v. Kalshi Inc., No. 2:26-cv-01517-MIS-GJF (D.N.M. July 22, 2026)).
Sports betting. The Mescalero Apache Tribe and three other tribal groups are suing Kalshi for allegedly offering sports betting on the tribes’ lands in violation of tribal gaming laws. The tribes are seeking a preliminary injunction against Kalshi.
According to the tribes, sports betting is Class III gaming under the Indian Gaming Regulatory Act (IGRA) and is prohibited to be offered on Indian lands outside of tribal-state gaming compacts and federally approved tribal gaming laws.
The tribes said Kalshi previously denied that it offered sports betting, but since January 2025 has openly advertised that it offers sports betting, and has even sought federal trademarks concerning its self-described “bookmaking services” related to sports betting and gambling.
“Kalshi’s acceptance of bets or contracts about sports events is the same service that bookmakers have conducted for centuries, and which other courts have recognized as sports betting,” the tribes wrote.
No federal preemption. The tribes stated that gaming on their lands is governed by federally approved tribal gaming laws and tribal-state gaming compacts under the IGRA.
Kalshi has argued in extensive litigation with states that the Commodity Exchange Act, as amended by the Dodd-Frank Act, preempts state gaming laws and gives the CFTC exclusive jurisdiction over event contracts traded on CFTC-registered exchanges.
But the tribes argued that issues of state law preemption do not apply to tribal gaming laws, which are governed by the IGRA.
“In turn, Indian Tribes are not States, and the differences in the form and nature of their sovereignty make it treacherous to import to one notions of pre-emption that are properly applied to the other,” the tribes wrote.
They argued that the IGRA expressly incorporates the tribal gaming laws, confirming and enforcing the tribes’ exclusive right to regulate gaming on Indian lands. And even if the IGRA delegates federal authority, the tribes believe they can still enforce the tribal gaming laws since the IGRA expressly requires compliance with those laws.
Further, they contended that Dodd-Frank did not impliedly partly repeal IGRA’s exclusive regulation of on-reservation online sports betting, since Dodd-Frank is “wholly silent” about that. A superseding statute, the Unlawful Internet Gambling Enforcement Act (UIGEA) is irrelevant both substantively and because it disclaims any change to IGRA, they said.
Proposed CFTC rulemaking. Kalshi had pointed to a CFTC advanced notice of proposed rulemaking to support its argument that the CFTC has exclusive jurisdiction over prediction markets. But the tribes said the notice is not a live regulation and would not repeal the IGRA in any case.
Injunction requested. The tribes said the court should issue a preliminary injunction to prevent irreparable harm from Kalshi’s operating online sports betting on tribal lands. They said this would be significant interference with their self-government, and the Tenth Circuit has “repeatedly stated that such an invasion of tribal sovereignty [as by precluding a tribe from enforcing its laws on its Indian lands] can constitute irreparable injury.”
This is case No. 2:26-cv-01517-MIS-GJF.
Attorneys: Daniel I.S.J. Rey-Bear (Rey-Bear McLaughlin, LLP) for Mescalero Apache Tribe. Erica J. Stutman (Snell & Wilmer L.L.P.) for Kalshi, Inc.
Companies: Kalshi, Inc.
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