Ninth Circuit Judges Question Kalshi’s Prediction Market on Tribal Land

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit signaled skepticism last week toward Kalshi’s argument that its sports event contracts can operate on tribal land without triggering federal Indian gaming law. During oral arguments on July 10 in Blue Lake Rancheria v. Kalshi, the judges repeatedly pressed Kalshi’s counsel on why its prediction-market contracts should be treated any differently from a standard sportsbook wager once a customer places one from a reservation.

The case is one of several fronts in a fast-moving legal battle over whether Kalshi’s sports-related event contracts are federally regulated financial derivatives, as the company insists, or unlicensed sports betting subject to state and tribal gaming law, as regulators and tribal governments across the country now argue.

What the Tribes Are Asking the Court to Do

Three federally recognized California tribes — Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of the Chukchansi Indians — are asking the Ninth Circuit to reverse a district court’s November decision denying their request for a preliminary injunction. That injunction would have blocked Kalshi and Robinhood from offering sports contracts on their reservations while the underlying lawsuit proceeds. U.S. District Judge Jacqueline Scott Corley found in November that the tribes had not shown they were likely to prevail, concluding they had not identified specific language in their gaming compacts or in the federal procedures governing their lands that Kalshi’s conduct violated. Corley also determined that the Unlawful Internet Gambling Enforcement Act, rather than the Indian Gaming Regulatory Act, governed the transactions at issue, and that UIGEA’s carve-out for CFTC-registered exchanges meant Kalshi’s contracts didn’t qualify as unlawful internet gambling when accessed from tribal land.

At Friday’s hearing, however, several judges appeared far less convinced. One judge reportedly said Kalshi’s contracts “sound like a bet” subject to Native American gambling laws, while another suggested it “wouldn’t be so unreasonable” to treat tribal lands as exempt from federal commodities-law oversight in this context. Lester Marston, the attorney representing the three tribes, argued that location fundamentally changes the legal analysis: conduct that may be lawful elsewhere can become unlawful the moment it occurs on a reservation, since the Indian Gaming Regulatory Act gives tribes exclusive authority over Class III gaming on their own land through approved compacts.

Kalshi’s CFTC Defense — and a Widening Legal Fight

Kalshi has continued to argue that its sports event contracts are federally regulated products listed on a CFTC-licensed exchange, placing them outside the reach of tribal and state gaming law entirely. The tribes also brought a false-advertising claim under the Lanham Act, alleging Kalshi misled consumers by marketing its platform as “legal in all 50 states” despite the contracts functioning, in the tribes’ view, exactly like traditional sports wagers.

The Ninth Circuit did not rule from the bench and has set no timeline for a decision. The panel could affirm Judge Corley’s order or reverse it and send the injunction request back for further consideration — though even a reversal wouldn’t resolve the underlying lawsuit or permanently bar Kalshi from tribal lands. This case is far from Kalshi’s only tribal-gaming headache: New Mexico tribes including the Mescalero Apache Tribe and three pueblos sued the company in May over similar allegations, and a federal judge separately allowed the Ho-Chunk Nation’s IGRA lawsuit against Kalshi to proceed after finding the tribe had shown a “likelihood of success.” Legal observers have suggested the broader conflict between federal commodities regulation and tribal gaming sovereignty could eventually reach the U.S. Supreme Court.

For now, the outcome in Blue Lake Rancheria v. Kalshi will be closely watched as a bellwether for how prediction markets intersect with tribal sovereignty nationwide — a question that carries direct implications for how platforms like Kalshi and its rivals structure sports-related contracts going forward, and how comfortable everyday users should be with the “legal everywhere” pitch some of these platforms have leaned on. Anyone weighing whether prediction markets are legal in their state should know that answer is still very much in flux while cases like this one work through the courts.