Kalshi has moved to have a Wisconsin tribe’s lawsuit against the prediction market dismissed, claiming that the tribe lacks legal standing because it is not a party to a tribal compact.
In August, the Ho-Chunk Nation of Wisconsin filed a lawsuit against Kalshi and its partner Robinhood, claiming that the business violated the Indian Gaming Regulatory Act (IGRA) by providing unlawful Class III gaming on tribal territories.
But late on Friday, Kalshi filed a brief in which he argued that the complaint should be dismissed. If the court agreed, this would essentially end the case, barring an appeal.
Many of the same arguments that persuaded a judge earlier this month to permit Kalshi to keep operating on tribal lands in a dispute brought by three California tribes are included in the brief.
Actually, Kalshi made a direct reference to the parallels between the two situations.
It stated, “Plaintiff’s Complaint is substantially similar to the earlier complaint, asserting the same causes of action and borrowing much of its overheated rhetoric.” “The same faulty theory—that IGRA gives the tribes a foothold to regulate trading on a derivatives exchange operating from many miles away—lies at the core of both complaints.”
The tribe claimed that by allowing sports betting, a type of Class III gaming, on its property, Kalshi had violated IGRA. The act’s statement that “Class III gaming activities shall be lawful on Indian lands only if such activities are authorized by” a tribal agreement was cited.
However, Kalshi contends that this does not apply to its business and that a tribe can only file a lawsuit if the conditions of the compact are broken.
According to Kalshi, “Section 2710(d)(7)(A)(ii) requires a violation of a tribal-state compact provision, meaning Congress did not intend to empower tribes or states to sue third parties – rather than each other — under that provision.” “Kalshi knows of only one instance in which a tribe tried to file a lawsuit under IGRA against a non-tribal third party, who was quickly removed from the case after reaching a settlement with the tribe.”
“The Complaint does not and cannot allege any violation of Plaintiff’s compact with Wisconsin,” the statement continued.
According to Kalshi, the compact primarily addresses what the state and the tribe must or may do; it makes no mention of what a third party, like itself, may do.
“Even if Kalshi could somehow breach a contract to which it is not a party, the Complaint — while full of conclusory assertions that Kalshi is violating the compact — points to no actual provision that Kalshi allegedly violated,” the company contends. “This stands to reason, because the agreement governs only the conduct of the parties who entered into it — Plaintiff and Wisconsin.”
While Kalshi admitted that the agreement does not allow the company to provide Class III gambling on tribal territory, it stated that “‘unauthorized’ conduct is beyond the scope of the statutory right of action; only violations of a compact trigger it.”
Kalshi went into greater detail about this interpretation of IGRA in a footnote. “No one has the power to sue over unlawful class III gaming activity that does not violate the express terms of a compact,” according to the statement. Instead, only the federal government would be able to file a lawsuit in this situation. Kalshi referenced the Supreme Court’s ruling in Michigan v. Bay Mills Indian Community, which held that a tribe cannot be sued by the state for providing gambling that is illegal under the IGRA but occurs off tribal property.
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