New Mexico Attorney General Raul Torrez has filed a lawsuit against prediction market platform Kalshi, saying the company is offering sports betting services in violation of state gambling laws.
Key Takeways
- Attorney General Raul Torrez says Kalshi offers illegal betting.
- Lawsuit claims Kalshi undermines the law and contributes to problem gambling.
- The legal action follows a lawsuit filed in May by tribal governments.
Announced on Thursday, the lawsuit argues that Kalshi has been taking sports-related wagers from users in New Mexico while operating outside the state's regulated gaming framework. According to the complaint, lawful gaming activities in New Mexico can only be run through tribal-state gaming compacts or state-regulated licensing.
The lawsuit, which was filed in New Mexico's First Judicial District Court, claims Kalshi's prediction markets products contribute to compulsive gambling and disrupt the gaming sector, which has been built on tribal compacts and state regulations.
The complaint also cites a 2025 study showing that 3.9% of surveyed New Mexico adults screened positive for problem gambling, compared with a national average of 1%.
The recent legal action follows a separate lawsuit brought in May by the Pojoaque, Sandia and Isleta pueblos and the Mescalero Apache Tribe. That federal lawsuit alleges Kalshi's services enable sports gambling on tribal lands and interfere with tribal gaming revenues.
The Chief of Staff of the New Mexico Department of Justice, Lauren Rodriguez, said the state's lawsuit and the tribal governments' case are complementary legal efforts.
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House Democrats urge FTC investigation into prediction markets
New Mexico joins the list of states challenging the prediction market model. And there is also prediction markets news on the federal level, with nine Democratic members of the U.S. House of Representatives having called on the Federal Trade Commission (FTC) to investigate whether prediction market companies are presenting conflicting descriptions of their businesses to consumers and regulators.
In a statement, Representatives Kevin Mullin and Gabe Vasquez said prediction market platforms may be advertising themselves to consumers using sports betting language, while describing their services to regulators as financial products and investment tools.
Prediction markets allow users to trade contracts based on the outcomes of future events. The sector has attracted increasing scrutiny in recent months, including congressional inquiries launched in May into Kalshi and Polymarket concerning their handling of insider-trading incidents.
The lawmakers argue that some prediction market operators market their services using terms commonly associated with sports gambling, including references to legal betting and wagering on sporting events without a traditional sportsbook, while seeking to avoid state gambling regulations.
In a letter to the FTC, the lawmakers requested information by June 29 regarding any planned investigations or enforcement actions involving prediction market platforms. They also asked whether the agency has received consumer complaints about the sector and how it evaluates public-facing advertising alongside regulatory filings when assessing potential deceptive practices.
