New Mexico Files Lawsuit Accusing Kalshi of Illegal Gambling

New Mexico has joined the growing list of states to file lawsuits against Kalshi.

Attorney General Raul Torrez has announced that his office has filed a lawsuit against the prediction market leader. The filing accuses Kalshi of illegally offering sports betting in the state, in violation of its gambling laws. The state is asking the court to force the operator to shut down its platform inside New Mexico’s borders.

“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,” Torrez shared in a press release. “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.”

While the filing means yet another legal battle for Kalshi, the lawsuit may ultimately not mean very much. There are several similar cases speeding their way towards the US Supreme Court, whose ruling will decide many of the remaining cases against prediction market operators.

New Mexico is now the seventeenth state to take legal action against the emerging industry.

How Will the CFTC Respond?

While New Mexico’s lawsuit isn’t surprising, the Commodity Futures Trading Commission's lack of response is. The federal regulator has been fighting hard to protect the industry under new commissioner Michael Selig. They have filed lawsuits against Democrat-led states that have taken legal action against the industry, but have yet to do so with New Mexico.

It remains possible that the CFTC will take action, but there may be a reason why it has held off. 

One reason could be the new regulations it proposed earlier this week. The regulator hopes this will help ease concerns from the public and their state lawmakers, though that has yet to happen.

Another possibility is political pressure, as many Americans remain wary of the industry. The regulator’s lawsuits against the states, and by extension taxpayers, have also not gone over well. Considering that both red and blue states have issues with prediction markets, the CFTC may be considering a change in strategy.