Ninth Circuit Deals Kalshi a Major Loss in California Tribal Gaming Fight, Setting Up a Fresh District Court Battle
A federal appeals court has handed two California tribes a significant win against the prediction market Kalshi, in a ruling that could reshape how tribal gaming law applies to the fast-growing sports-contract industry nationwide. On Sept. 16, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit found that Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians are likely to succeed in showing that Kalshi’s sports event contracts, when offered to users physically located on their reservations, violate the federal Indian Gaming Regulatory Act. The panel reversed part of a lower-court order that had denied the tribes a preliminary injunction and sent the case back to the U.S. District Court for the Northern District of California to resolve the remaining injunction factors.
Circuit Judge M. Margaret McKeown, writing for the panel, dismissed Kalshi’s argument that its contracts are legally distinct from sports betting because they’re structured as federally regulated derivatives. She illustrated the point with a hypothetical bettor standing in the Blue Lake Casino Hotel who downloads both Kalshi and a licensed sportsbook app: on Kalshi she buys a $100 contract paying out if the Giants win; on the other app she wagers $100 on the same outcome. “The bettor, the place, the stake, and the contingency remain the same,” McKeown wrote. “The only thing that changes is Kalshi’s vocabulary.” The court also held that a wager occurs wherever the bettor is standing, not wherever Kalshi’s servers sit, a distinction that legal analysts say gives other tribes with gaming ordinances a clearer path into federal court.
The ruling builds on an Aug. 28 decision in a separate Nevada case, Kalshi v. Assad, where the same circuit found that sports event contracts likely function as bets and that the Commodity Exchange Act doesn’t shield Kalshi from state gaming law. That finding put the Ninth Circuit at odds with the Third Circuit, which sided with Kalshi in a New Jersey case earlier this year, a split that legal observers say increases the odds the U.S. Supreme Court eventually takes up the underlying preemption question.
The tribes’ case isn’t fully resolved. The district court still must weigh irreparable harm and the public interest before any injunction takes effect, and a third tribe, Picayune Rancheria of the Chukchansi Indians, withdrew from the case last month. Kalshi’s attorney declined to comment on the ruling, though the company may seek further appellate review, following the same path it’s taking in the Nevada case.
The stakes reach beyond this one case. California’s tribes have separately challenged prediction markets more broadly, and Attorney General Rob Bonta has joined a multistate effort scrutinizing the industry, even though Kalshi continues operating in California outside tribal land under its federal CFTC registration.
What to watch: the district court’s ruling on the remaining injunction factors, and whether Kalshi appeals to the full Ninth Circuit or seeks Supreme Court review given the emerging circuit split.
Sources: Courthouse News Service (courthousenews.com/ninth-circuit-deals-blow-to-kalshi-on-tribal-land/); Buchalter law firm analysis (buchalter.com/insights/ninth-circuit-kalshis-sports-contracts-are-class-iii-gaming-on-tribal-land-and-tribes-can-sue-to-stop-them/); Gaming.net (gaming.net/ninth-circuit-revives-tribal-challenge-to-kalshi-sports-contracts/)