Kalshi Takes Tribal Sovereignty Fight to Ninth Circuit Over Sports Markets

Three California tribes have asked the Ninth Circuit to revive their bid to block Kalshi’s sports event contracts on tribal lands. The appeal opens a new front in the prediction market’s regulatory fight: whether its federal exchange status can shield it from tribal governments invoking federal Indian gaming law.

Key Takeaways

• Three California tribes seek to block Kalshi contracts on tribal lands.
• Kalshi says IGRA cannot reach a company outside tribal gaming agreements.
• 27 states and Washington, D.C., filed an amicus brief supporting the tribes.

Tribal case tests a different Kalshi defense

Kalshi faced the Ninth Circuit on July 10 as Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of the Chukchansi Indians challenged a lower-court decision allowing its sports markets to remain available on their lands. The appeal follows a November order denying their request for a preliminary injunction against Kalshi and its distribution partner Robinhood. The tribal appeal reaches the Ninth Circuit amid a widening federal preemption split over whether event contracts belong exclusively under commodities law.

Attorney Lester Marston, representing the tribes, argued that Kalshi is offering unauthorized Class III gaming from Indian lands in violation of tribal gaming ordinances. Marston told the panel that the ordinances cannot be separated from the compact and procedures because those agreements require gaming to comply with the tribes’ regulatory frameworks, arguing that IGRA would provide little protection if an outside company could offer unauthorized gaming on their lands but avoid suit because its name does not appear in the governing agreements.

Kalshi attorney Grant Mainland urged the court to focus on the agreements’ text. The prediction market is not a party to any of them, he argued, and the cited provisions govern what the tribes may offer rather than what an independent, federally regulated exchange may make available online. Mainland said IGRA has not previously been used in the manner proposed by the tribes against an unrelated private company.

That position prevailed before US District Judge Jacqueline Scott Corley. Although Corley found that Secretarial Procedures are functionally equivalent to compacts under IGRA, she concluded that the relevant provisions did not prohibit Kalshi’s conduct. The documents address internet games offered by the tribes but are silent about companies such as Kalshi, according to her ruling.

Corley also held that the Unlawful Internet Gambling Enforcement Act governed the disputed internet transactions. UIGEA’s definition of a “bet or wager” excludes transactions conducted on a registered entity under the Commodity Exchange Act, and the judge found that Kalshi fell within that exclusion. She further concluded that the Commodity Futures Trading Commission possessed exclusive jurisdiction to determine whether Kalshi’s event contracts complied with commodities law. The ruling addressed only preliminary relief and did not finally decide the tribes’ claims.

The appeal has drawn support from Massachusetts, California, 25 other states and Washington, D.C. Their amicus brief argues that Kalshi’s interpretation would allow a CFTC-registered exchange to bypass IGRA and tribal authority merely by placing sports wagers inside federally regulated contracts. The Ninth Circuit separately declined to send the dispute to the panel handling Kalshi’s Nevada litigation, citing “significant differences” between the two appeals.

The California ruling also conflicts with a Wisconsin decision finding that the Ho-Chunk Nation was likely to succeed on a similar IGRA claim against Kalshi. That split gives the Ninth Circuit’s treatment of the California case significance beyond the three tribes involved.

The underlying lawsuit is stayed until the Ninth Circuit rules in this appeal and Kalshi’s separate Nevada case. Its eventual decision could determine whether Kalshi’s federal exchange status protects it only from state gambling regulators — or also from tribes using federal law to control gaming conducted from their own lands.