US Appeals Court Blocks Kalshi Event Contracts on Tribal Lands

A U.S. federal appeals court on Wednesday blocked prediction market platform Kalshi from offering its sports-related event contracts on the lands of two Native American tribes in California. The ruling marks a significant legal setback for the platform and its partner, Robinhood Markets, in the ongoing national dispute over the regulation of prediction markets.

The Court's Ruling

In a 3-0 decision, the 9th U.S. Circuit Court of Appeals in San Francisco granted a preliminary injunction requested by the Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians. The court found the tribes were likely to prove that Kalshi’s contracts violate the federal Indian Gaming Regulatory Act (IGRA) and their own tribal gaming ordinances.

Writing for the court, Circuit Judge Margaret McKeown stated that each Kalshi event contract constituted "an act of placing a bet or wager." The court determined that neither the tribes' gaming ordinances nor the U.S. Department of the Interior had authorized such activities by a non-tribal entity like Kalshi on their lands. This decision overturns a lower court's denial of an injunction in November.

Industry Implications

The ruling is Kalshi's second major legal defeat in less than a month, following an August 28 decision by the same court that subjected the platform to oversight by Nevada gaming regulators. The decision also impacts electronic trading platform Robinhood Markets, which stated it would lose substantial business if it could not route customer orders through Kalshi.

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A Kalshi spokesperson said the company may appeal, arguing the ruling is "hard to square with other federal laws, which leave regulation of on-exchange derivatives trades exclusively to the [Commodity Futures Trading Commission]." A Robinhood spokesperson said the company is evaluating its legal options.

Broader Regulatory Battle

This case highlights the broader jurisdictional conflict over whether prediction markets should be regulated as financial derivatives by the federal Commodity Futures Trading Commission (CFTC) or as gambling by state and tribal authorities. Kalshi allows users to wager on a wide range of outcomes, including sports, elections, and economic events.

A bipartisan coalition of 27 states and Washington, D.C. supported the tribes' appeal, arguing that a ruling in favor of Kalshi would undermine their authority to regulate illegal gambling. The ongoing legal challenges may ultimately require the U.S. Supreme Court to decide the regulatory future of the burgeoning prediction market industry.