California Tribes Sue Kalshi Over Sports Contracts

Three California tribes have filed an appeal in the Ninth Circuit to challenge the availability of Kalshi’s sports event contracts on tribal lands. The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians aim to reverse a lower court’s denial of a preliminary injunction, which would have barred Kalshi and its partner Robinhood from offering sports markets on their reservations.

Attorney Lester Marston, representing the tribes, argued that Kalshi’s activities constitute unauthorized Class III gaming under the Indian Gaming Regulatory Act (IGRA). “The ordinances cannot be separated from the compact and procedures because those agreements require gaming to comply with the tribes’ regulatory frameworks,” Marston told the panel. He contended that allowing Kalshi to operate without being party to tribal compacts undermines tribal sovereignty.

Kalshi’s attorney, Grant Mainland, countered that the exchange is not a party to the tribal compacts and that the agreements govern only the tribes’ operations, not those of an independent, federally regulated exchange. This position had been upheld in November by U.S. District Judge Jacqueline Scott Corley, who ruled that IGRA did not apply to Kalshi in this context, and that the Unlawful Internet Gambling Enforcement Act (UIGEA) and Commodity Futures Trading Commission (CFTC) jurisdiction were the applicable regulatory frameworks.

Judges Examine Sovereignty and Federal Preemption

During the July 10 oral arguments, Ninth Circuit judges questioned why Kalshi’s contracts should be treated differently from traditional wagers when accessed from tribal land. While the panel gave no ruling or timeline, their questions suggested some judges were sympathetic to the tribes’ argument that the contracts function like conventional sports bets under tribal law.

The case highlights the tension between IGRA, which grants tribes authority over Class III gaming on their lands, and the federal registration of Kalshi as a CFTC-licensed exchange. Should the Ninth Circuit reverse the lower court, the question of whether these sports contracts violate tribal gaming regulations will return to Judge Corley for reconsideration.

This litigation thread runs parallel to separate appeals in the Sixth Circuit, which will address whether Kalshi’s contracts qualify as swaps under the Commodity Exchange Act, highlighting a broader debate over prediction markets’ legal status across the United States.

Wider Implications for California Tribal Gaming

California tribes have long maintained exclusivity over Class III gaming, including sports betting, under state compacts. The growth of prediction markets like Kalshi complicates these efforts by allowing residents on tribal land to access sports wagers without tribal involvement.

According to DeFi Rate, James Siva, chairman of the California Nations Indian Gaming Association, said that these platforms pose “the largest threat we face since the creation of this industry,” noting that tribal online sports initiatives planned for 2028 are partially a response to the rise of prediction markets. Tribal leadership argues that the continued expansion of Kalshi’s services could diminish their leverage for a future statewide ballot measure on tribally led online sports betting.

The outcome of the Ninth Circuit appeal will have implications beyond the three tribes directly involved. California represents the nation’s largest untapped sports betting market, and how courts balance federal licensing with tribal sovereignty could reshape the regulatory landscape for prediction markets nationwide.