A federal judge in Wisconsin Monday denied the Ho-Chunk Nation’s request for a preliminary injunction to keep Kalshi from operating on its lands while the case proceeds.
U.S. District Judge William M. Conley of the Western District of Wisconsin also granted Kalshi’s request to dismiss the portions of a lawsuit brought under the Lanham Act and the Racketeer Influenced and Corrupt Organizations Act (RICO). He said the tribe can move forward with its complaint under the Indian Gaming Regulatory Act (IGRA), though he dismissed Robinhood as a defendant.
Conley’s focus on IGRA is clear through his written opinion.
“Finally, if there were any ambiguity as to a tribe’s authority to enjoin class III gaming
conducted on its tribal lands under IGRA, the well-established canons of statutory construction
require that this court interpret that ambiguity to benefit the Nation tribe,” he wrote. “See, e.g., Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766 (1985) (‘[S]tatutes are to be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit ….’). Accordingly, the court concludes that plaintiff can sue Kalshi under IGRA for violating its Tribal-State compact and Gaming Ordinance by offering class III gaming on Indian lands absent authorization from plaintiff.”
Both sides could claim a partial victory from the decision — the Ho-Chunks because they can move forward with the most relevant part of their claim, and Kalshi because the denial to allow action under the Lanham is the third of its kind. The Lanham Act deals with the practice of deceptive marketing, leaving it to a judge to determine if a party knowingly advertised an illegal product.
One tribal lawyer breathed a sigh of relief Monday, as he said he feared the Lanham and RICO claims had the potential to be an “unnecessary distraction” from the key part of the complaint — the claim of violating IGRA.
Three tribes suing Kalshi in California also included in their complaint that they believe Kalshi is violating the Lanham Act. The judge in that case denied a request for a preliminary injunction, saying Kalshi appeared to be acting in good faith in advertising its products. Judges in district courts in Nevada and New Jersey previously came to the same conclusion. A Maryland judge disagreed.
Judge: Tribes can sue third parties
The Ho-Chunks claim that Kalshi is violating IGRA by offering its product on tribal land. IGRA gives Indian Country the power to determine if and what kind of Class III gambling is allowed on reservations, though it was written before the internet was in wide use.
Under IGRA, many federally recognized tribes offer Class III gaming, including casino-style games and sports betting, at on-reservation casinos. In Wisconsin, online sports betting was not legal at the time the complaint was filed, but Gov. Tony Evers signed a legal online sports betting bill last month.
It’s not clear when the first digital bets will be offered, but the tribes now have the right to negotiate with the state to offer them and have exclusivity. Some Wisconsin tribes have been offering in-person sports betting since 2021. The Ho-Chunk Nation compacted for retail sports betting in 2024.
The tribes aren’t alone in battling prediction markets. Wisconsin’s attorney general is also at odds with Kalshi — the state sued the prediction market in late April, and days later, Kalshi’s federal regulator, the Commodity Futures Trading Commission (CFTC), sued the state.
In Monday’s ruling, Conley wrote that Kalshi argued that “Congress only empowered states or tribes to sue each other for breach of contract under IGRA, not to sue third parties, like Kalshi.” He goes on to reject that claim, and also notes that neither the Seventh Circuit nor the Supreme Court has addressed the issue. He also says that the tribal-state compacts are not just “agreements by two private parties,” but rather that the compacts “represent agreement as to gambling regulation and enforcement between two governmental bodies — a tribe and a state — under the imprimatur of the federal government.”
Conley ultimately concludes that the Ho-Chunks can sue Kalshi under IGRA because the company is violating the compact by offering Class III gaming on Indian land without permission. In reaching his ruling, Conley also explored what the phrase “on Indian lands” means, and he interpreted the Unlawful Internet Gaming Enforcement Act (UIGEA) as meaning “the UIGEA prevents using the internet to circumvent existing state, tribal and federal gambling laws, but does not create any additional substantive prohibitions.” That alone, Conley wrote, would be enough to dismiss the UIGEA argument.
CEA, UIGEA don’t supersede IGRA
Conley also considered whether or not certain contracts allowed by the Commodity Exchange Act (CEA) fall under a CFTC carve-out in UIGEA, and he ultimately determined that Kalshi “took the argument too far.” He wrote that “just because Kalshi’s conduct is not prohibited by the UIGEA, does not make its offering of sports betting contracts legal anywhere, much less on Indian lands where it is expressly prohibited.”
In addition, Conley pointed out that the Ho-Chunk Nation did not sue Kalshi under UIGEA, and even if it had, UIGEA does not supersede IGRA. Calling UIGEA a “non-substantive payment-processing law,” the judge quoted UIGEA text that clearly states it does not preempt IGRA.
“’No provision of this section shall be construed as altering, superseding, or otherwise affecting
the application of the Indian Gaming Regulatory Act[,]’ id. § 5365(b)(3), or ‘as altering,
limiting, or extending any Federal or … Tribal-State compact prohibiting, permitting, or
regulating gambling within the United States,'” he wrote. “The UIGEA goes even further by directing that it should not even ‘be construed as’ doing either.”
Finally, Kalshi argued that the CEA preempts IGRA. Conley pointed to a Third Circuit ruling in which the court defined Kalshi’s sports event offerings as “swaps,” meaning they fall under CFTC regulation, not gambling regulation. But, he said, even if he bought into that argument, “defendants have not shown that the CEA would necessarily preempt or repeal IGRA, nor limit plaintiff’s tribal authority.”
Injunction request a request too far
In denying the Ho-Chunks’ request for a preliminary injunction to keep Kalshi’s products off its land, Conley conceded that while he agrees that the tribe was able to make its case for a complaint under IGRA, granting a preliminary injunction is considered an “extraordinary remedy” used to “maintain the status quo.” He also wrote that the tribe would have to meet two thresholds — “a likelihood of success on the merits and irreparable harm.”
With regard to irreparable harm, Conley wrote that the tribe has been unable to provide sufficient evidence to support this claim in relation to economic harm. With regard to “non-economic harm,” which he said comes in the form of violating its sovereignty and rights under IGRA, Conley agreed — but not enough to alter the current situation.
On the Lanham Act claim, Conley cited the 1996 D.C. Circuit decision in Dial A Car, Inc. v. Transportation, Inc., which stated that the law was “ambiguous” at the time of the decision — and Kalshi made a similar argument, writing that regulatory jurisdiction over prediction markets is at issue. Courts hearing cases between Kalshi and states are, in part, attempting to determine if sports event contracts will ultimately fall under the CFTC’s purview or state gambling regulation.
Conley dismissed the RICO claims in large part because he is not convinced that the Ho-Chunks were able to show that Kalshi “willfully” committed fraud. Instead, Kalshi has unapologetically and publicly advertised what it believes to be a legal gambling enterprise.
