Kalshi’s Maryland court fight draws tribal opposition

Kalshi’s lawsuit in Maryland escalates as 27 tribes step in to oppose its sports contracts.

They argue Kalshi’s prediction markets breach CFTC Rule 40.11 and Indian Gaming Regulatory Act (IGRA).

Hence, this tribal coalition aims to protect sovereign gaming rights and state gambling control.

Read on to explore how this dispute reshapes prediction market legality and tribal sovereignty.

Kalshi Legal Battle in Maryland Spurs Tribal Opposition

3 Key Points

• Legal Challenge Intensifies: 27 tribes filed amicus briefs opposing Kalshi’s injunction request in Maryland.
• Regulatory Breach Claim: The tribes argue Kalshi’s sports event contracts violate CFTC Rule 40.11 and IGRA.
• Precedent Impact: This case shapes the future legal framework for prediction markets and tribal-state gaming sovereignty.

The Maryland court case involving Kalshi, a federally regulated prediction market operator, has gained traction with an amicus brief brought by a coalition of 27 federally recognised Indian tribes and seven tribal organisations. The legal fight is centered on whether specific event contracts offered by Kalshi effectively constitute illegal sports wagering, thereby violating both CFTC Rule 40.11 and the Indian Gaming Regulatory Act (IGRA).

Tribal Sovereignty & IGRA Protection

The brief asserts that Kalshi’s sports event contracts fall squarely under Class III gaming, protected under IGRA. The tribes cite U.S. Code § 5362 to define “wager,” showing how Kalshi’s offerings meet this criterion. They argue IGRA assigns regulation of sports betting to tribes, meaning Kalshi’s operations infringe upon tribal sovereignty and regulatory regimes.

CFTC Rule 40.11: A Categorical Ban

CFTC Rule 40.11(a)(1) explicitly prohibits event contracts involving “gaming.” The tribal brief emphasizes it is a categorical ban, not subject to discretionary review. Kalshi’s claim that the CFTC must conduct a new public-interest review per § 40.11(c) is rejected. According to tribes, such contracts are already disallowed due to the rule’s clear language and legislative intent.

Statutory Interpretation & Congressional Intent

The amicus brief cites statements from lawmakers, such as Senator Blanche Lincoln, reinforcing the intent that Rule 40.11 was meant to block gambling via futures markets. This proves Kalshi’s platforms operate outside permissible economic activities and conflict with both CEA and IGRA frameworks.

Broader Jurisdictional Conflict

Kalshi argues the Commodity Exchange Act (CEA) preempts IGRA. The tribes counter, stating the CEA only applies to lawful CFTC-governed transactions. Gambling, by its nature, remains explicitly regulated under IGRA, meaning the CEA should not override tribal jurisdiction. Allowing preemption would dismantle IGRA’s regulatory foundation.

Strategic Implications for Kalshi

If the court sides with the tribes, Kalshi may face prohibition on offering its sports event contracts nationwide, significantly affecting its business model. Their initial legal positioning hinges on a “two-step CFTC approval” that the tribes refute as legally baseless.

Further, tribal support adds weight to parallel cases in New Jersey and Nevada, showing growing opposition from influential legal stakeholders.

Wider Industry Impact

This case could redefine permissible prediction market content. If the courts affirm tribal arguments, operators may need to avoid sports-based event contracts, reframing their platforms to avoid IGRA-classified gaming. This could also invite further legal scrutiny and regulation.

In Maryland and beyond, the battle over Kalshi highlights a critical shift in gambling regulation. The entrance of 27 Indian tribes signals a unified defence of tribal sovereignty and established gaming boundaries. Their arguments draw from regulatory statutes and legislative intent, urging courts to reject Kalshi’s interpretation of CFTC authority. A ruling in their favor could profoundly reshape prediction market operations and reaffirm tribal-state regulatory control over Class III gaming.

This case marks a critical moment for prediction market legality—and tribal rights are staking a clear claim.