A group of 27 federally recognized tribes and seven tribal associations has joined the legal dispute between prediction exchange platform Kalshi and the state of Maryland by filing an amicus brief.
Kalshi’s Contracts Allegedly Threaten Tribal Gaming Operations
The tribes argue that Kalshi’s sports event contracts function as illegal sports wagers, echoing their previous intervention in a similar case in New Jersey. This joint filing in Maryland’s U.S. District Court follows an earlier brief by over 65 tribal groups supporting the state’s position.
The coalition includes major organizations like the Indian Gaming Association, the National Congress of American Indians, several regional tribal gaming associations, and 27 individual tribes. They claim Kalshi’s contracts, which allow users to bet money on sporting events but are regulated as financial products by the Commodity Futures Trading Commission (CFTC), pose a direct threat to tribal gaming operations.
The filing also mentions the “shared, strong interest” of the Tribal Amici, considering the case’s potential impact on their member tribes’ sovereign rights to conduct and regulate gaming on Indian lands. The tribes underline the significance of gaming revenue for funding essential government services and supporting economic independence.
The “Special Rule” Matter
The case centers on a significant legal question: does the Commodity Exchange Act (CEA), which governs futures trading, override the Indian Gaming Regulatory Act (IGRA) that specifically regulates tribal gaming? The tribes dispute Kalshi’s assertion that the CEA preempts IGRA, arguing that the “special rule” giving the CFTC authority to ban markets related to gaming indicates that Congress never intended for futures law to cover gambling.
The brief states, “Kalshi’s sports betting operation rests entirely on its assertion that it alone has the preemptive authority to self-certify that its gaming activities do not violate the CEA, CFTC regulations, IGRA, or other federal statutes governing gaming, such as the UIGEA and the Wire Act. This is incorrect.”
Motion Filed
Kalshi’s legal team has countered by filing a motion to exclude the tribes’ brief, arguing that the tribes have no direct stake in the Maryland case and do not present new arguments beyond those already made by state defendants.
Kalshi’s statement read, “If putative amici were permitted to file a brief at this late stage, Kalshi would have less than 48 hours before its supplemental response brief is due to respond to the material putative amici now raise.”
The tribes also dispute Kalshi’s interpretation of a “two-step process” under the special rule, which requires CFTC review before banning an event contract. The brief quotes former Senator Blanche Lincoln, a key architect of the law, who cautioned in 2010 that sports event contracts like those for the Super Bowl “would be used solely for gambling” and have no commercial purpose.
The Maryland lawsuit originates from the state’s cease-and-desist order demanding that Kalshi stop offering sports-related event contracts. Kalshi sued to block the order, citing prior injunctions won in Nevada and New Jersey. The case is now before the U.S. Court of Appeals for the Third Circuit, with multiple tribes and states filing briefs opposing Kalshi’s contracts.
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- Source: SCCGManagement.com