Kalshi and Robinhood Markets were hit with a federal lawsuit this week from the Ho-Chunk Nation, a federally recognized tribal nation in Wisconsin that operates multiple gaming facilities under a state compact allowing sports betting on tribal lands.

The plaintiffs’ main objection seems to be that the gambling takes place not in their casinos, but on smartphones.

Lawsuit Against Kalshi Over Sports Betting on Tribal Lands

The 47-page complaint, filed in the Western District of Wisconsin, accuses Kalshi of disguising sports betting as "event contracts" that allow users to buy "yes" or "no" positions on sporting event outcomes. The Wisconsin-based tribe argues this violates the Indian Gaming Regulatory Act, which gives tribes exclusive authority to regulate gaming on their lands.

Kalshi markets itself as a regulated derivatives exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term where users can trade on real-world events, from sports outcomes to political elections. The platform has gained attention for allowing 18-year-olds to place what the tribe calls "bets" on everything from NFL games to March Madness basketball tournaments.

"Currently, 18-year-old high school students across the United States, including some that are located on Indian reservations, are on their phones placing bets on the outcome of virtually every sporting event occurring across the globe," the complaint states.

While it is clear that the tribes are concerned about someone taking a share of their profitable business, they may be right about one thing: event contracts are largely sports bets. This is evident even in the latest offering from CME Group, which this week partnered with the online gaming company FanDuel, a provider of sports betting.

Event Contracts: Gamble or Not?

The lawsuit centers on whether Kalshi's sports event contracts constitute gambling under federal law. While Kalshi describes its offerings as regulated commodities contracts overseen by the Commodity Futures Trading Commission (CFTC), the Ho-Chunk Nation argues these are simply sports wagers disguised with financial terminology.

The tribe points to Kalshi's own marketing Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term materials as evidence, citing Instagram posts where the company promoted itself as "The First Nationwide Legal Sports Betting Platform" and advertised "Sports Betting Legal in all 50 States on Kalshi."

Wisconsin law restricts sports betting to tribal casinos operating under state compacts. The Ho-Chunk Nation operates three gaming facilities and claims Kalshi's platform directly competes with its regulated sportsbooks by allowing people to bet from home instead of visiting tribal casinos.

Robinhood Also Hit

The complaint also targets Robinhood, which partnered with Kalshi in March to offer a "prediction markets hub" on its investment platform. During March Madness alone, Kalshi reported over $320 million in trading volume on tournament-related contracts.

The timing of Kalshi's expansion into sports markets has raised eyebrows. The company filed to offer sports event contracts in January, just days after Donald Trump Jr. announced he was joining Kalshi as a strategic advisor. Trump's nominee to chair the CFTC, Brian Quintenz, currently serves on Kalshi's board and owns stock in the company.

Several states have already moved against Kalshi's sports offerings. Nevada, New Jersey and Maryland gaming regulators have sent cease-and-desist letters demanding the platform stop operating in their jurisdictions. In response, Robinhood implemented geofencing to block users in certain states, though Kalshi has filed lawsuits challenging state authority.

The Ho-Chunk Nation's case follows similar litigation from three California tribes who sued Kalshi and Robinhood earlier this year. These tribal nations argue that unregulated online gambling undermines their exclusive gaming rights and diverts revenue that funds tribal government services.