New Mexico has become the latest state to go after prediction markets, targeting Kalshi in a new lawsuit that alleges the platform hewed too closely to what sportsbooks offer.
The New Mexico Department of Justice is suing Kalshi, joining four of the state’s tribes that launched a similar legal action against the firm in May.
Tribes and Now the State Are After Kalshi in New Mexico
The Sandia, Isleta and Pojoaque Pueblos and the Mescalero Apache Tribe previously sued the platform over its availability to individuals aged 18 and over and the fact that people use Kalshi’s app to “place bets” (Kalshi argues that it facilitates trades, not bets) on tribal land, alleging that it is impacting tribal sovereignty and sports gambling rights.
The Department has alleged that Kalshi is offering online sports betting in the state by allowing people to place sports wagers in violation of existing state laws.
Attorney General Raúl Torrez agrees with this conclusion and joins his counterparts in New York, Massachusetts, Kentucky and Illinois in launching similar actions against the platform and the sector as a whole.
This has drawn a response from the Commodity Futures Trading Commission (CFTC), which argues that legal actions against prediction market platforms under state laws are an attempt to preempt its exclusive authority over the sector. Torrez disagrees.
“New Mexico has a longstanding and carefully balanced system for regulating gaming that protects consumers, ensures accountability and respects tribal sovereignty,” the attorney general said.
He further insisted that the only licensed forms of gambling in the state are permitted under existing tribal-state gaming compacts or under strict state regulations, ensuring these operations are free of corruption.
“Kalshi has ignored that framework entirely while offering online sports betting within the state,” Torrez insisted, adding that the lawsuit is meant to protect the integrity of state laws and the existing regulatory system, and, not least, consumer safety.
Kalshi Pushes Back on Any Attempts to Define It as Gambling
Kalshi has repeatedly denied that its products constitute gambling and has insisted that state laws do not apply to it. The company did, however, join the National Council on Problem Gambling in a bid to strengthen consumer protection measures, a nod to the fact that prediction markets may still lead to excessive behavior in some customers.
The company has nonetheless been adamant in rebuffing any suggestion of gambling ties, with recent filings to the US Patent and Trademark Office seeing it remove any mentions of gambling from its IP.
The Department further insists that by offering event contracts, Kalshi effectively makes it possible for anyone to place a sports bet in the state, despite the platform holding no gaming license.
Another key issue is that the platform has set its minimum admittance age at 18, three years below the state-required 21.