By Ruth Callahan
BUFFALO — In a brief now sitting before the U.S. Supreme Court, 130 federally recognized tribes and 15 tribal organizations open with a history lesson.
“For centuries, prospectors have encroached on Indian lands, stealing gold, minerals, and other vital resources,” the tribes wrote. “Today’s prospectors are so-called prediction markets.”
The brief, filed Oct. 8 in Flaherty v. KalshiEX, LLC, No. 26-299, asks the justices to take up New Jersey’s appeal of a Third Circuit ruling that sided with Kalshi, the New York City-based exchange that lets customers buy “yes” or “no” contracts on the outcome of football games and other events. The tribes argue that Kalshi’s sports contracts are gambling by another name, offered on reservations without tribal consent and in competition with the casinos and sportsbooks that pay for tribal schools, clinics and police.
Kalshi says the opposite: that Congress gave a federal regulator, the Commodity Futures Trading Commission, exclusive authority over its contracts, and that state and tribal gaming laws cannot reach them.
The fight is moving on several fronts at once. On Tuesday, the Seventh Circuit agreed to hear Kalshi’s appeal in a case brought by the Ho-Chunk Nation of Wisconsin. New York’s attorney general is suing Kalshi in Manhattan. And here in Western New York, the Seneca Nation, which runs licensed sportsbooks at its three casinos, is negotiating a new gaming compact with Albany at the same moment a federally registered exchange headquartered in New York is offering sports contracts to people across the state.
‘An affront to tribal sovereignty’
The tribal brief was filed by the Washington firm Zimmer, Citron & Clarke, with Rachel G. Shalev as counsel of record, along with John E. Echohawk of the Native American Rights Fund. The signers include the Saint Regis Mohawk Tribe at Akwesasne in northern New York, the Ho-Chunk Nation, the Mashantucket Pequot Tribal Nation, the Mohegan Tribe, the Seminole Tribe of Florida, the Eastern Band of Cherokee Indians and the Muscogee (Creek) Nation. Organizations signing on include the National Congress of American Indians, the Indian Gaming Association and the United South and Eastern Tribes Sovereignty Protection Fund. The Seneca Nation is not among the listed signers.
At the center of the case is a single word. Kalshi argues that when Congress added the term “swap” to the Commodity Exchange Act in the 2010 Dodd-Frank law, it brought event contracts like its sports markets under the CFTC’s exclusive control.
“That argument is, in one word, absurd,” the tribes wrote.
They point to two federal appeals courts that have rejected Kalshi’s reading. The Sixth Circuit ruled against the company on Sept. 25 in KalshiEX v. Schuler. The Ninth Circuit did the same on Aug. 28 in KalshiEX v. Assad, writing in a line the tribes quote: “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments when it amended the [CEA] to add the definition of swap we are considering today.”
On Sept. 16, a separate Ninth Circuit panel ruled in Blue Lake Rancheria v. Kalshi that “[i]ts sports event contracts are class III gaming” under the Indian Gaming Regulatory Act. That is the category of casino-style gambling that, under federal law, a tribe can offer only under a compact with its state.
The Third Circuit, ruling for Kalshi on April 6, went the other way. That split is the main reason New Jersey and its supporters say the Supreme Court needs to step in.
The tribes also lean on the CFTC’s own words. In a 2024 rulemaking, the agency said it “is not a gaming regulator.” The brief says Kalshi operates under a self-certification process at the CFTC, with “almost no regulatory safeguards — and certainly nothing like what tribal, state, or federal law requires.”
“This state of affairs is unacceptable,” the brief says. “It is an affront to tribal sovereignty, an end-run around Congress and the States, and a violation of basic notions of fair play and sound regulation.”
The money at stake
Tribal gaming is not a side business. Nearly 250 tribal governments operate gaming in 29 states, according to the brief, and the industry brought in more than $46 billion in gross gaming revenue in fiscal 2025, citing figures from the National Indian Gaming Commission. Federal law requires that the money go to tribal government operations, the general welfare of tribal members and economic development.
The brief says tribes spend more than $450 million a year on gaming regulation and employ more than 6,000 regulators. It says tribal gaming generates more than $7 billion a year for the federal government and $5 billion for states and local governments.
“Every dollar illegally diverted to gaming on prediction markets is a dollar that no longer goes to jobs, housing, healthcare, education, public safety, and other critical government services for tribal citizens and their surrounding communities,” the tribes wrote.
They also argue that leaving the question unsettled does its own harm, because tribes, states and investors cannot plan around a legal map that differs from one circuit to the next. “The uncertainty itself works an injury,” the brief says.
The brief closes by asking the court to stop prediction markets from being allowed to “plunder Indian resources in a modern-day gold rush.”
Tribal leaders have been making the same case outside the courtroom. Jonodev Chaudhuri, ambassador for the Muscogee (Creek) Nation and a former chairman of the National Indian Gaming Commission, told Mvskoke Media this week that the issue reaches every tribal gaming operation.
“The prediction market threat is real, and it is an example of a threat that’s national but also local,” Mr. Chaudhuri said. “If these event contracts, as they’re framed, are allowed to effectively provide sports betting without any regulation in our neck of the woods, that results in unregulated gaming being conducted in our territory.”
“It potentially siphons off revenue that is rightfully regulated under a very complex framework of laws,” he said. “It siphons off revenue that otherwise should be going to important programs and services for our citizens.”
David Bean, chairman of the Indian Gaming Association, made a similar point at the Global Gaming Expo in Las Vegas last month: “Prediction markets will never be too big or financially successful to ignore state and Tribal sovereignty, engage in unfair competition, or present products that are harmful to underage and adult consumers.”
Kalshi’s case, and the tribes who signed up
Kalshi has framed its position as a straightforward question of federal law. In a motion to dismiss a suit by the Mescalero Apache Tribe, quoted in the tribal brief, the company argued: “Congress, through the [CEA], gave the [CFTC] exclusive jurisdiction over event contracts traded on Kalshi’s exchange. That federal command preempts the very tribal laws that Plaintiffs claim they can enforce.”
The company has also argued that prediction markets can be good for tribes, especially ones far from population centers. On Oct. 7, Kalshi announced agreements with entities tied to four tribal governments: the Alabama-Quassarte Tribal Town in Oklahoma and, in California, Greenville Rancheria, Alturas Indian Rancheria and the Kletsel Dehe Wintun Nation’s economic development authority. Under the deals, each tribe brands its own app while Kalshi supplies the exchange behind it.
“More tribes are recognizing that federally regulated prediction markets offer a real path to new, sustainable revenue,” Kalshi chief executive Tarek Mansour said in the release. “Prediction markets and Tribal economic development don’t have to be at odds.”
Michael Stopp, a spokesman for the Alabama-Quassarte Tribal Town, put it in terms of fairness among tribes in the same release: “Sovereignty cannot mean protecting opportunity for the haves while closing the door on the have-nots.”
That announcement has its own complications. The release quoted Wilson Yargee as chief of the Alabama-Quassarte Tribal Town, but Samuel Marshall Jr., who also claims the title, said in a statement that the tribal town has no affiliation with Kalshi. Kalshi and Mr. Stopp maintain that a signed agreement exists, according to Legal Sports Report. The leadership dispute remains unresolved.
Seventh Circuit takes the Ho-Chunk case
The newest development came Tuesday. A Seventh Circuit panel of Circuit Judges John Z. Lee, Doris L. Pryor and Nancy L. Maldonado granted Kalshi permission to appeal in Ho-Chunk Nation v. Kalshi, according to a copy of the order posted by gaming attorney Daniel Wallach and reported by Spinner. The appeal is docketed as No. 26-8020.
In May, U.S. District Judge William M. Conley in Madison, Wisconsin, dismissed the Ho-Chunk Nation’s racketeering and false-advertising claims but let its claims under the Indian Gaming Regulatory Act go forward. He denied the tribe a preliminary injunction, finding it was likely to succeed but had not shown irreparable harm. In September he certified the key legal questions for immediate appeal and stayed the case. Robinhood, which offers Kalshi contracts to its customers, is also a defendant.
Judge Conley wrote that the case would “certainly be appealed all the way up to the Supreme Court,” according to Spinner’s account.
The Supreme Court has not yet decided whether to hear the New Jersey case. Kalshi’s response to New Jersey’s petition is due Nov. 9 after an extension, according to the court’s docket. The NFL, the American Gaming Association, a coalition of states led by Ohio and the Cabazon Band of Mission Indians have also filed briefs.
New York’s own fight
New York is in the middle of this, both as a regulator and as Kalshi’s home.
Attorney General Letitia James sued KalshiEX LLC in state Supreme Court in Manhattan on July 31, in an action announced jointly with Gov. Kathy Hochul. Her petition calls the company’s products “quintessentially wagering under the guise of ‘event contracts’ on a ‘prediction market,’” notes that Kalshi “is not licensed with the New York State Gaming Commission in any capacity,” and says the company has reported a $22 billion valuation and $178 billion in annualized transaction volume. The state wants Kalshi barred from operating a gambling business in New York without a license, an accounting of all bets placed, restitution and penalties, including $100,000 for each unauthorized offer of sports wagering.
Kalshi went to federal court to block New York’s enforcement and lost in July. Its appeal is pending in the Second Circuit, where New York’s response brief is due Friday, according to CBS Sports. Kalshi has kept operating in New York under an emergency order the CFTC issued in August.
The federal regulator has taken Kalshi’s side. CFTC Chairman Michael S. Selig said: “New York intends to make event contract derivatives waste away under its iron curtain of state gaming laws before the courts get the chance to issue final rulings.” He added that “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws,” according to CBS Sports.
For now, New Yorkers can still trade Kalshi’s sports contracts.
What it means for the Seneca Nation
The Seneca Nation is not a party to any of these cases. But it is negotiating with Albany over the rules that will govern gaming in Western New York for years to come, and a large unlicensed rival would change the math.
The Nation’s 2002 compact with the state expired in December 2023 and has been kept alive by quarterly extensions. Revenue-sharing payments under the old compact have been placed in escrow, Nation officials have said, after years of conflict over the state’s promise of gaming exclusivity in Western New York.
Seneca President J. Conrad Seneca said earlier this month, according to Buffalo Toronto Public Media, that the two sides had reached terms. “We negotiated an agreement in principle that, right now, contains no revenue sharing provision with New York State,” he said. “We expect this agreement will be finalized and sent to the New York State Legislature sometime in the spring.”
He said the Nation had been open to a revenue share in exchange for protection. “The Seneca Nation was willing to discuss a fair revenue share agreement as a part of a new compact, but New York was unwilling to provide us any market protections or opportunities to grow,” he said.
The governor’s office described the talks differently. “State officials have been engaged in productive discussions with the Seneca Nation on a new gaming compact that would be fair for all parties,” a spokesperson for Ms. Hochul’s office told the station. “There is currently no agreement and conversations are ongoing with stakeholders.”
Exclusivity is the heart of that dispute, and prediction markets test what exclusivity means. A compact can bar the state from licensing a competing casino in Seneca territory. It does nothing about an app on a phone in Salamanca or Niagara Falls that a federal regulator says is a derivatives market rather than a sportsbook.
The stakes reach beyond the Nation. Niagara Falls Mayor Robert Restaino told reporters this month that losing the city’s yearly casino share, around $10 million to $13 million, would leave “a substantial gap to fill” in a budget of about $100 million.
If the Supreme Court takes the New Jersey case, a decision could come by next summer. If it does not, the conflict among the circuits will go on, and so will the uncertainty the tribes told the justices is itself an injury.
The Buffalo Chronicle sought comment from Kalshi, the Seneca Nation, the Indian Gaming Association, the New York State Gaming Commission and the office of Attorney General James. Any responses will be added to this story.
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