A Ninth Circuit panel appeared skeptical Friday of Kalshi’s argument that its federally regulated sports contracts can be offered on tribal lands without violating federal Indian gaming law, repeatedly pressing the company on why the markets should be treated differently from conventional sports betting.
The judges heard oral arguments in an appeal brought by Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of the Chukchansi Indians. The tribes are asking the appeals court to reverse a district judge’s denial of a preliminary injunction that would block Kalshi from offering sports contracts on their lands while the underlying lawsuit remains pending.
Robinhood is also a defendant because customers can trade Kalshi-listed event contracts through the Robinhood app. Although the injunction request targeted Kalshi, Robinhood argued that restricting the exchange would also harm its prediction market business.
Judges question why Kalshi differs from sportsbooks
Judge M. Margaret McKeown asked Kalshi attorney Grant Mainland to consider someone on tribal land buying a Kalshi contract that pays out if the San Francisco Giants win, while also placing the same wager through DraftKings.
“So, in your view, the first one would be allowed, the Kalshi, but not the DraftKings?” McKeown asked.
“Certainly, designated contract markets are regulated differently from regulated sportsbooks,” Mainland responded. As he began to qualify his answer, McKeown interrupted: “So the answer is yes.”
The underlying lawsuit alleges Kalshi is conducting unauthorized Class III gaming when customers access the contracts from the tribes’ reservations. Friday’s hearing was limited to whether the district court properly denied the tribes’ injunction request, but the panel’s questions suggested it may be reluctant to accept Kalshi’s broader claim that Commodity Futures Trading Commission (CFTC) oversight leaves tribes unable to restrict the markets on their own lands.
Tribes say federal oversight does not displace IGRA
The tribes argued that Kalshi’s status as a CFTC-regulated exchange does not allow it to offer sports contracts on tribal lands if the same activity would otherwise violate federal Indian gaming law.
“Let’s just assume that their conduct off the reservation is totally legal,” Lester Marston, an attorney representing the tribes, told the panel. “I put to you this: the moment that you take that legal conduct, and you engage in that exact same conduct on the reservation, they’re committing a crime under 1166, and they’re violating the civil provisions of the IGRA.”
Section 1166 of the federal criminal code generally applies a state’s gambling licensing, regulation and prohibition laws in Indian country as federal law. The statute excludes Class I and Class II gaming regulated under IGRA and Class III gaming conducted under an approved tribal-state compact.
Marston argued that because California law prohibits sports betting, offering the contracts on the tribes’ reservations would violate federal law under Section 1166, even if Kalshi’s conduct is legal elsewhere.
The tribes also brought a false-advertising claim under the Lanham Act, the federal trademark law that also prohibits false or misleading statements in commercial advertising. They allege Kalshi misled consumers by marketing its sports event contracts as “legal in all 50 states.” McKeown raised the claim Friday while questioning Mainland about Kalshi’s position that its contracts are not Class III gaming. The exchange highlighted the tension between Kalshi’s use of sports betting language in its advertising and its argument that the contracts are federally regulated derivatives rather than gambling.
Kalshi says tribes have not identified a compact violation
Kalshi urged the court to resolve the appeal without deciding the larger conflict between federal commodities regulation and Indian gaming law. Mainland argued that the IGRA provision invoked by the tribes only permits lawsuits over Class III gaming conducted in violation of a tribal-state compact, and that the tribes had not identified any compact language Kalshi violated.
“Do the plaintiff tribes have the right to sue?” Mainland said. “Under IGRA’s plain text, the answer is no.”
Mainland also argued that allowing the lawsuit to proceed would create “a 240 tribe exception” to the CFTC’s exclusive jurisdiction over designated contract markets.
“But that wouldn’t be so unreasonable,” Judge Richard Paez responded. “I mean, the whole tribal situation is a very complicated relationship.”
The parties also disputed whether the tribes’ gaming ordinances are legally incorporated into the agreements governing gaming on their lands. Picayune operates under a tribal-state compact, while Blue Lake and Chicken Ranch operate under federal procedures issued by the Interior Department in place of compacts. Marston pointed to language requiring gaming conducted under those agreements to comply with tribal ordinances, while Kalshi and Robinhood argued that the documents lack the explicit incorporation language found in a similar Wisconsin case.
Tribes challenge lower court’s refusal to block contracts
Friday’s hearing stemmed from U.S. District Judge Jacqueline Scott Corley’s November decision denying the tribes’ request for a preliminary injunction. Corley found they had not shown they were likely to prevail, leaving Kalshi free to continue offering sports contracts on their lands.
Corley concluded that the tribes had not identified language in Picayune’s compact or the federal procedures governing Blue Lake and Chicken Ranch that prohibited Kalshi’s conduct. That is the conclusion the tribes are now asking the Ninth Circuit to reverse.
She also found that the Unlawful Internet Gambling Enforcement Act, rather than IGRA, governed the challenged internet transactions. UIGEA excludes transactions conducted on or subject to the rules of a CFTC-registered exchange from its definition of a bet or wager, which Corley said meant Kalshi’s contracts did not qualify as unlawful internet gambling under that statute when accessed from tribal lands.
Corley further declined to decide whether Kalshi’s sports contracts are lawful under the Commodity Exchange Act, finding that question fell within the CFTC’s authority. The tribes argue that approach gave federal commodities law too much weight and failed to account for their separate authority under IGRA to regulate gaming on their lands.
Corley also rejected the tribes’ request to block Kalshi’s nationwide-legality advertising, finding they had not identified a false or misleading statement likely to support their Lanham Act claim.
Ninth Circuit ruling could shape other tribal challenges
The Ninth Circuit did not rule from the bench Friday and has no set deadline to issue a decision. The court could affirm Corley’s order or reverse and send the injunction request back for further consideration. The underlying district court case is stayed while the Ninth Circuit considers this appeal and the related Nevada appeals.
Even a reversal would not resolve the underlying lawsuit or permanently bar Kalshi from tribal lands. It could instead require Corley to reconsider whether the tribes are likely to prevail and whether they have shown the immediate, irreparable harm required for a preliminary injunction. Robinhood argued Friday that the tribes had offered no evidence that event contracts were diverting customers or revenue from their casinos.
The case could determine how far the federal authority claimed by prediction market exchanges extends on tribal lands. Kalshi has argued in litigation around the country that sports contracts traded on a CFTC-regulated exchange fall under the Commodity Exchange Act and cannot be regulated as conventional sports betting.
Most of those cases involve state regulators, including New Jersey litigation in which the Third Circuit upheld a preliminary injunction for Kalshi and pending Ninth Circuit appeals over Nevada’s enforcement efforts. The tribal challenge raises a different question because it pits the federal commodities framework against IGRA, another federal law, and the authority tribes exercise over gaming on their own lands.
The outcome could also influence similar tribal cases. A Wisconsin judge allowed the Ho-Chunk Nation’s central IGRA claims against Kalshi to proceed but denied an injunction because the tribe had not shown irreparable harm, while four New Mexico tribes filed a separate challenge in May. A Ninth Circuit ruling for the California tribes could strengthen efforts to require Kalshi and other prediction market platforms to block access from reservations even if their contracts remain available elsewhere in a state.
