Kalshi urges federal judge to dismiss Ho-Chunk Nation’s sweeping IGRA lawsuit

Kalshi, the prediction-market operator, is asking a federal judge to throw out a lawsuit brought by the Ho-Chunk Nation. The company says the Wisconsin tribe has no legal grounds to challenge its sports-event contracts and can’t use tribal gaming laws to police trading on a derivatives exchange that’s already regulated at the federal level.

In its filing reviewed by ReadWrite, Kalshi argues that the tribe is trying to stretch the Indian Gaming Regulatory Act (IGRA) way beyond what it was ever meant to cover. “Years ago, Congress achieved a delicate balance of federal, state, and tribal interests in regulating gaming activity ‘on Indian lands,’” Kalshi writes, quoting its brief. The company argues that IGRA “applies on Indian territory ‘and nowhere else.’” In September, we reported that Kalshi argued that the location of placed bets does not contradict the IGRA.

The Ho-Chunk Nation filed its lawsuit against Kalshi in August, arguing that the company’s new sports prediction markets encroach on the tribe’s exclusive right to regulate gaming and could cut into its casino revenue. Other tribes in California have already brought similar suits.

Kalshi, however, says the tribe doesn’t have the authority to make that claim. Pointing to a recent ruling from the Northern District of California in a case involving other tribes, the company notes that “IGRA does not provide the foothold Plaintiff seeks,” pointing to Blue Lake Rancheria v. Kalshi Inc. The court in that case held that tribes “do not have a cause of action except to pursue violations of state-tribal compacts, which the Complaint does not and cannot allege.”

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Kalshi says the lawsuit falls apart right from the start because the Ho-Chunk Nation isn’t part of any tribal–state compact that involves the company in the first place. Without that kind of agreement, Kalshi argues, the tribe has no basis to bring the case at all.

Kalshi says IGRA doesn’t apply to CFTC-regulated markets

Kalshi operates as a Designated Contract Market (DCM), meaning it’s overseen by the US Commodity Futures Trading Commission (CFTC). Its brief underlines that IGRA governs only gaming “‘located’ or ‘conducted’ on reservations,” and that Congress enacted IGRA “a few years before the internet became publicly available.”

It continues: “Nowhere does IGRA convey any intent to regulate the derivatives markets” that had been brought under federal jurisdiction. Instead, Kalshi says those markets are governed solely by the Commodity Exchange Act (CEA) and fall squarely under the CFTC’s oversight and not tribal gaming rules.

To drive the point home, the company’s filing walks through decades of congressional action showing how regulation of derivatives has been intentionally consolidated at the federal level. For example, in the 1974 amendments to the CEA, Congress gave the CFTC “exclusive jurisdiction over trading” on federally designated contract markets.

UIGEA exemption for CFTC-regulated markets

Kalshi also points to the Unlawful Internet Gambling Enforcement Act (UIGEA). The law typically bans accepting payments tied to illegal online gambling, but it specifically exempts exchanges that are regulated by the CFTC, a carve-out Kalshi says firmly covers its operations.

UIGEA excludes from its definition of prohibited wagers “any transaction conducted on or subject to the rules of a registered entity… under the Commodity Exchange Act.” Because Kalshi is a registered DCM, the company says the tribe’s argument under UIGEA falls apart.

As the brief summarizes: “Kalshi’s contracts fall within the UIGEA’s exemption for transactions regulated under the Commodity Exchange Act.”

Kalshi calls Ho-Chunk Nation’s claims “flawed” and “overheated”

Kalshi further characterizes the Ho-Chunk Nation’s lawsuit as “the same flawed theory” advanced by the California tribes and says the tribe misrepresents Kalshi’s regulatory compliance. The company rejects the accusation that its contracts are “‘explicitly prohibited’ under the CEA,” countering that its sports-event contracts were properly self-certified under CFTC rules.

Even if Kalshi had violated CFTC regulations (which it denies), the motion argues that only the CFTC, not tribes, has enforcement authority: “The CEA preempts Plaintiff’s ordinances when it comes to Kalshi’s event contracts.”

Kalshi is asking the court to dismiss the lawsuit with prejudice, arguing that the Ho-Chunk Nation can’t fix the problems in its complaint even if it tried to revise it.

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If the judge agrees, the outcome would line up with the recent ruling in California and further reinforce the idea that tribes can’t use IGRA to regulate or block federally regulated derivatives markets, even when those markets involve sports outcomes that tribes typically offer as gaming.

The Ho-Chunk Nation has not yet filed its response to the motion.

Featured image: Canva / Kalshi

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