Tribal Groups Use Supreme Court Ruling to Expand Legal Fight Against Kalshi

The legal battle over Kalshi, a fast-growing prediction market platform, has heated up as tribal groups point to a recent US Supreme Court decision to strengthen their case. 

Tribes Say SCOTUS Ruling Exposes Gaps in CFTC Oversight

In a July 1 filing, over 65 tribes and tribal organizations argued that the Supreme Court’s June 27 ruling in Federal Communications Commission v. Consumers’ Research supports their claim that the Commodity Futures Trading Commission (CFTC) does not have proper control over Kalshi’s event-based contracts.

Kalshi, offering yes-no contracts on various events from elections to sports, has grown into a key player in prediction markets. It started to offer Super Bowl-related contracts earlier this year, sparking opposition from state regulators and tribal governments. While Kalshi has federal approval from the CFTC, its critics claim it operates outside normal gambling rules and taxes.

Tribal groups see Kalshi‘s activities as a direct challenge to their sovereign rights and gaming income. The Indian Gaming Regulatory Act (IGRA) gives tribes full control over gaming on their lands. Tribes caution that letting Kalshi continue without checks could hurt tribal economies, which depend on gaming to fund basic services.

The tribes point to a recent Supreme Court decision that sets tougher rules for federal agencies to check products before letting companies self-certify. The CFTC, on the other hand, has allowed platforms like Kalshi to self-certify contracts without much scrutiny. Tribal spokespeople say this difference shows how weak the CFTC’s oversight is and weakens Kalshi’s legal stance.

Amid State and Tribal Lawsuits, Kalshi Raises $185M and Eyes Wider Market Reach

Kalshi is already battling similar issues in several states, including Maryland, where tribal groups filed another supporting brief against the platform. Top lawyers from 34 states have also backed New Jersey, claiming that Kalshi’s contracts work as unregulated sports betting.

As legal challenges pile up, Kalshi keeps growing. The New York company got $185 million in a big Series C round in late June. Paradigm led this round, which pushed Kalshi’s value to $2 billion. Big names like Sequoia Capital and Citadel Securities’ CEO Peng Zhao, put money in, too. Kalshi wants to use this cash to build up its tech and develop new partnerships. It aims to get its platform into more trading apps such as Robinhood and Webull.

Despite regulatory challenges, Kalshi’s leaders stand firm. CEO Tarek Mansour called the situation a tough battle to keep prediction markets alive. He highlighted Kalshi’s large user base and record-breaking trading volumes in sports and political markets. The Third Circuit will review the latest filings in the next few weeks, with possible hearings set for September. The result could change not only Kalshi’s future, but also how the US regulates prediction markets across the country.