New Mexico has become the latest US state to challenge prediction market operator Kalshi, with Attorney General Raul Torrez filing a lawsuit that alleges the company is offering illegal sports betting products to residents outside the state’s regulated gaming framework.
The complaint, filed in the First Judicial District Court, argues that Kalshi’s sports-related event contracts function as traditional sports wagers and therefore violate New Mexico gaming laws. State officials claim that legal gaming in New Mexico can only be conducted through tribal-state gaming compacts or under specific state-authorized regulatory structures.
According to the lawsuit, Kalshi promoted itself as a nationwide legal sports betting platform and allowed users in New Mexico to place wagers on sporting events. The state further alleges that the company accepts customer funds, settles bets, and profits from wagering activity in a manner similar to licensed sportsbooks. The filing also claims that when there is no opposing participant for a trade, Kalshi may use an affiliated entity to take the opposite side of the position.
Torrez said the case is about preserving New Mexico’s established gaming system, which is designed to protect consumers, ensure regulatory oversight and respect tribal gaming rights. State officials are seeking an injunction that would prevent Kalshi from continuing to offer sports event contracts within New Mexico.
The lawsuit follows a separate legal challenge launched in May by several New Mexico tribal governments, including the Pojoaque, Sandia and Isleta pueblos, along with the Mescalero Apache Tribe. That case alleges Kalshi’s operations amount to unlawful sports betting on tribal lands and threaten tribal gaming revenues.
New Mexico joins a growing list of states that have taken action against Kalshi as regulators and courts continue to debate whether prediction market contracts fall under state gambling laws or federal commodities regulations. Similar disputes have emerged in Arizona, Michigan, Nevada, Wisconsin and other jurisdictions, highlighting the ongoing legal battle over the future of prediction markets in the United States.