One of several lawsuits involving Kalshi is moving forward in Maryland, and has now attracted attention from Indian tribes against the predictions market operator.
A coalition of 27 federally recognised Indian tribes and seven tribal organisations has filed an amicus brief in the US District Court for the District of Maryland.
Collectively, they oppose Kalshi’s motion for a preliminary injunction against the Maryland Lottery, intended to prevent the state from enforcing a recent cease-and-desist order against the company.
The tribal groups argue that certain event contracts offered by Kalshi constitute a form of sports wagering.
This, they argue, falls squarely under prohibitions already established by the Commodity Futures Trading Commission (CFTC) and violate the Indian Gaming Regulatory Act (IGRA).
The tribes’ position mirrors an earlier filing in the US Court of Appeals for the Third Circuit, where tribal entities again filed an amicus brief arguing against Kalshi’s position that its event contracts do not constitute sports wagering.
In both cases, the briefs emphasise the legal framework underpinning CFTC Rule 40.11(a), which categorically prohibits certain types of event contracts on public interest grounds.
The tribal briefs argue that §40.11(a)(1) of the CFTC regulations provides a clear and categorical prohibition on certain event contracts, including those involving gaming, war, terrorism, and political control.
According to the brief filed in Maryland, the CFTC’s decision to include these categories in its 2012 rulemaking was not arbitrary.
Instead, the brief argues it was an expression of congressional intent embedded within the Commodity Exchange Act (CEA), particularly under the so-called “Special Rule” added in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Tribes argue rule prevents prediction market gambling
Quoting directly from the CFTC’s rationale during the rule-making process, the amicus brief emphasises that the prohibition on gaming-related event contracts was designed to prevent the use of futures markets for gambling.
They cite the Commission’s own language stating that “its prohibition of… ‘gaming’ contracts is consistent with Congress’s intent… to ‘prevent gambling through the futures markets.’”
The rule was also designed to “protect the public interest from gaming and other events contracts.”
Central to the dispute is Kalshi’s interpretation of the rule. Kalshi contends that the CFTC must undergo a two-step process when assessing event contracts under §40.11.
In Kalshi’s view, the CFTC must first identify whether a contract involves a prohibited category, and then conduct a separate 90-day public interest review under §40.11(c) before making a final determination.
The tribal amicus brief rejects this interpretation, arguing that the CFTC has already made the requisite public interest finding when it initially promulgated §40.11(a)(1).
As such, it argues that no additional review is necessary for contracts that clearly fall into the prohibited categories.
The brief states that the 90-day discretionary review provided in §40.11(c) applies only to ambiguous contracts that “may involve” a prohibited category — not to those that unquestionably do, as it argues several of Kalshi’s products do.
The brief also draws attention to congressional intent as captured in legislative history.
It cites comments made by Sen. Blanche Lincoln, one of the architects of the Special Rule, who stated during a Senate hearing that the law was intended to block event contracts used “to enable gambling,” particularly on sporting events and other speculative occurrences.
She argued at the time that such contracts serve no commercial purpose and would exist solely for gambling — precisely the kind of activity the Special Rule was designed to curtail.