Kalshi, a regulated prediction market, appeared before the Ninth Circuit Court of Appeals on July 10 to defend its sports markets against challenges from three California tribes: Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians. The tribes are appealing a lower court’s November decision that denied their request for a preliminary injunction against Kalshi and its distribution partner Robinhood.
The core of the dispute hinges on whether Kalshi’s operations on tribal lands constitute unauthorized Class III gaming under the Indian Gaming Regulatory Act (IGRA). Attorney Lester Marston, representing the tribes, argued that Kalshi is offering these services in violation of tribal gaming ordinances. He contended that these ordinances are integral to tribal-state compacts and procedures, and that letting an outside company bypass them would undermine IGRA’s protections.
Kalshi’s attorney, Grant Mainland, took a different stance. He urged the court to focus strictly on the text of the agreements. Mainland pointed out that Kalshi is not a party to any of those compacts or procedures. The provisions, he argued, regulate what the tribes themselves can offer, not what an independent, federally regulated exchange like Kalshi can provide online. He emphasized that IGRA has never been applied in this way against an unrelated private company.
This argument previously won over US District Judge Jacqueline Scott Corley. While she acknowledged that Secretarial Procedures are functionally equivalent to compacts under IGRA, she found that the specific provisions did not prohibit Kalshi’s conduct. The documents address internet games offered by the tribes but say nothing about companies like Kalshi.
UIGEA and CFTC Jurisdiction
Judge Corley also ruled that the Unlawful Internet Gambling Enforcement Act (UIGEA) governs the transactions in question. UIGEA’s definition of a “bet or wager” excludes transactions conducted on a registered entity under the Commodity Exchange Act. Since Kalshi is registered with the Commodity Futures Trading Commission (CFTC), the judge found it falls within that exclusion. She further concluded that the CFTC has exclusive jurisdiction to determine whether Kalshi’s event contracts comply with commodities law. The ruling only addressed preliminary relief and did not finalize the tribes’ claims.
The appeal has drawn significant 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 simply by framing sports wagers as federally regulated contracts. The Ninth Circuit separately declined to send this dispute to the panel handling Kalshi’s litigation in Nevada, citing “significant differences” between the two appeals.
Conflicting Decisions and Broader Implications
The California ruling stands in contrast to a Wisconsin decision, where a court found that the Ho-Chunk Nation was likely to succeed on a similar IGRA claim against Kalshi. This split makes the Ninth Circuit’s treatment of the California case particularly important, not just for the three tribes involved but for the entire industry.
The underlying lawsuit is on hold until the Ninth Circuit rules in this appeal and Kalshi’s Nevada case. The 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 on their own lands. That question touches on fundamental issues of tribal sovereignty and federal preemption.
