New Mexico joins states suing prediction market Kalshi
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- New Mexico Attorney General Raúl Torrez filed suit in state court against Kalshi on June 4, alleging the platform operates an illegal sportsbook without a licence under state law.
- The complaint cites underage access and a state problem gambling rate of 3.9%, roughly four times the national average of 1%.
- The action follows a separate federal lawsuit filed in May by four New Mexico tribal governments, with both cases proceeding in tandem.
New Mexico Attorney General Raúl Torrez has sued prediction market platform Kalshi in state court, alleging it is unlawfully offering online sports betting in the state without approval from the New Mexico Gaming Control Board and outside the framework of its tribal-state gaming compacts.
The lawsuit, filed on June 4 in the First Judicial District Court in Santa Fe, names Kalshi, Inc. and KalshiEX LLC as defendants. It seeks an injunction to block the platform from continuing to offer sports-related event contracts to users in the state.
State framework ignored
The complaint alleges Kalshi’s platform functions as a traditional sportsbook, allowing users to place wagers on sporting outcomes through so-called “event contracts,”.
According to the New Mexico Department of Justice, lawful gaming in the state can only operate under tribal-state gaming compacts or strict state-regulated licensing.
The suit further alleges Kalshi permitted users aged 18 to 20 to participate on the platform, three years below New Mexico’s minimum gaming age of 21. The state contends this access to younger users compounds harm in a market already recording disproportionately high rates of problem gambling.
A 2025 study cited in the complaint found that 3.9% of surveyed New Mexico adults screened positive for problem gambling, compared with a national average of approximately 1%. The American Gaming Association has separately brought the industry’s concerns over prediction market growth to Capitol Hill.
Raúl Torrez, Attorney General of New Mexico, said:
“New Mexico has a longstanding and carefully balanced system for regulating gaming that protects consumers, ensures accountability, and respects tribal sovereignty.
“The only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption, and licenses gaming operators only after they explain how they plan to address compulsive gambling.
“Kalshi has ignored that framework entirely while offering online sports betting within the state. We are filing this lawsuit to protect the integrity of our laws, our regulatory system, and most importantly, consumers.”
Tribal actions align
The state action follows a separate federal lawsuit filed in May by Pojoaque Pueblo, Sandia Pueblo, Isleta Pueblo and the Mescalero Apache Tribe. The tribal complaint argues Kalshi’s event contracts undermine the tribes’ exclusive gaming rights secured through compact negotiations, threatening revenue that funds schools, healthcare and community services.
Lauren Rodriguez, Chief of Staff of the New Mexico Department of Justice, said the state lawsuit and the tribal case are complementary legal efforts proceeding in parallel. The pattern echoes efforts in Wisconsin, where state-level and tribal-level actions against Kalshi are similarly advancing in tandem.
Casino workers have also demanded Congress act on the issue, arguing the rapid expansion of unregulated prediction market activity threatens licensed gaming jobs and revenues.
A growing legal battleground
New Mexico is part of a growing wave of state-level actions against Kalshi. The CFTC has filed suits against five states, asserting exclusive federal jurisdiction over event contracts as swaps under the Commodity Exchange Act.
Minnesota went further in May, becoming the first state to criminalise the operation of prediction market platforms outright.
The federal-state jurisdictional split remains unresolved. Federal judges in New Jersey, Arizona and Tennessee have favoured Kalshi’s federal preemption argument, courts in Massachusetts and Nevada have sided with the states.
The Third Circuit ruled for Kalshi on April 7, 2026, holding that sports event contracts are swaps under the Commodity Exchange Act and that federal preemption applies. The Ninth Circuit’s pending decision in the Nevada appeal could create a circuit split, raising the prospect of Supreme Court intervention.
Light & Wonder president and CEO Matt Wilson has cautioned that prediction markets have gone parabolic, raising the urgency of a definitive regulatory resolution.
Nine Democratic members of the US House of Representatives have separately called on the Federal Trade Commission to investigate whether prediction market companies are presenting conflicting descriptions of their businesses to consumers and regulators.
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