FEDERAL VS STATE REGULATION
Conversely, state regulators assert that each state’s regulations and laws apply to regulated (and illegal) gambling therein, and that the CFTC cannot (and was not intended to) regulate gambling or supersede the states’ authority to regulate gambling. The regulators contend Kalshi’s SE Contracts are sports wagers that must comply with state-by-state sports betting laws and regulations. Further, regulators and Native American tribes alike claim prediction markets are in violation of Tribal-State Gaming Compact provisions that guarantee tribes exclusive sports betting opportunities within tribal reservation lands. Tribal Voices Tribes have expressed concern with the scope of SE Contracts, asserting these offerings cause various harms and should be subject to state-by-state regulation rather than CFTC regulation. 4 Specifically, tribes have argued that the offering of SE Contracts on tribal lands violates the Federal Indian Gaming Regulatory Act (“IGRA”), along with state and tribal laws. IGRA grants tribes the exclusive right to regulate and conduct gaming on their lands, including sports betting (pursuant to a tribal-state gaming compact). SE Contracts have been characterized by tribes as unlawful on tribal lands under IGRA and detrimental to tribal interests. Tribes view these SE Contracts as a diversion of revenues from tribal casinos that frustrates IGRA’s purpose of providing for tribal self- sufficiency. In addition to IGRA, tribes have suggested additional federal legal violations plague these SE Contracts, including the Interstate Wire Act, the Illegal Gambling Business Act, and the Unlawful Internet Gambling Enforcement Act. 5
Setting aside federal legal interpretation issues, tribes have expressed significant apprehension over the impact of SE Contracts on their communities, as well as the states in which their tribal lands are located. Tribes claim SE Contracts subject tribal communities to unregulated gambling without the benefit of adequate consumer protection. That 18-year- olds are able to participate in gambling through SE Contracts using mobile apps like Kalshi’s on tribal lands has led to great concern by tribes. Tribes maintain that such conduct is gambling, which requires appropriate identity verification and age screening to shield vulnerable individuals and those below the state minimum gambling age. Additionally, tribes characterize marketing materials claiming SE Contracts are a legal method of nationwide sports betting as fraudulent advertising. Furthermore, tribes point out that Kalshi’s SE Contracts lack the licensing, monitoring, anti-corruption controls, and problem-gambling safeguards required under state and tribal gaming laws. Tribes assert that IGRA and Tribal-State Compacts, in addition to regulatory safeguards, contain requirements which have the effect of decreasing the risks of match-fixing, market manipulation, and harms to vulnerable populations, while Kalshi’s SE Contracts are not protected by such safeguards. Tribal Advocacy California and Wisconsin-based tribes are among those seeking a judicial remedy. 6 Court filings by tribes include requests for declaratory judgment that Kalshi’s SE Contracts constitute unlawful sports betting on tribal lands and injunctions preventing any further offerings and attendant marketing. 7 These lawsuits also seek corrective advertising
4 Staudenmaier & Vanderkarr, supra note 1; see also Sydney Price, Calif. Tribes Seek Ban On Kalshi’s Alleged Sports Gambling , Law360 (Sept. 5,2025, 7:07 PM EDT),https://www.law360.com/articles/2384822/calif-tribes-seek-ban-on-kalshi-s-alleged-sports-gambling. 5 Vanderkarr & Kintner, supra note 1; see also Illegal Gambling Business Act, Fiveable,https://library.fiveable.me/key-terms/criminal-law/ille- gal-gambling-business-act (last visited April 24, 2025); Unlawful Internet Gambling Enforcement Act, Fed. Trade Comm’n, https://www.ftc.gov/ legal-library/browse/statutes/unlawful-internet-gambling-enforcement-act(last visited Apr. 24, 2025); Steve Ruddock, Unlawful Internet Gam- bling Enforcement Act, Betting USA (Dec. 8, 2024), https://www.bettingusa.com/laws/uigea/; David Hoppe, The Impact of PASPA’s Repeal on Sports Betting, GAMMA LAW (Jan. 1, 2021), https://gammalaw.com/the-impact-of-paspas-repeal-on-sports-betting/; S. 555, 100th Cong. (1987). 6 Staudenmaier & Vanderkarr, supra note 1; see also Price, supra note 7. 7 Id.; see also Blue Lake Rancheria et al. v. Kalshi Inc. et al., No. 1:25-cv-06162 (N.D. Cal. filed July 22, 2025), https://www.pacermonitor.com/
IMGL MAGAZINE | DECEMBER 2025
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