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- A 3-0 decision by the 9th U.S. Circuit Court of Appeals blocked Kalshi from offering sports event contracts on the lands of two California tribes, ruling that the contracts likely violate the Indian Gaming Regulatory Act.
- The legal setback also impacts Robinhood—which routes customer event contract orders through Kalshi—and adds to a growing wave of regulatory and court challenges facing prediction markets across the country.
A federal appeals court has blocked Kalshi from offering sports event contracts on the lands of two California tribes, handing the prediction market operator another setback in its fight over how its products should be regulated.
In a 3-0 decision, the 9th U.S. Circuit Court of Appeals said the tribes were likely to show that Kalshi’s contracts violate the Indian Gaming Regulatory Act and the tribes’ own gaming ordinances. The ruling also matters for Robinhood, which routes customer event contract orders through Kalshi.
9th Circuit sides with tribes in injunction fight
The tribes in the case are Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians. The appeals court sent the dispute back to U.S. District Judge Jacqueline Scott Corley in San Francisco after she denied a preliminary injunction last November.
Writing for the panel, Circuit Judge Margaret McKeown described each Kalshi event contract as “an act of placing a bet or wager.” She also wrote that “IGRA thus confers upon the tribes a cause of action to enjoin Kalshi’s sports event contracts on their lands.”
The court rejected Kalshi’s argument that the tribal gaming law was displaced by the federal Unlawful Internet Gambling Enforcement Act.
That makes this the latest legal blow for Kalshi in less than a month. On Aug. 28, the same appeals court said Kalshi was subject to oversight by Nevada gaming regulators.
Why the ruling matters for prediction markets
The case is part of a broader dispute over whether sports and other event contracts should be treated as gambling products or as federally supervised financial instruments.
Kalshi spokesperson Elisabeth Diana said the ruling was difficult to reconcile with other federal law, saying, “This ruling is hard to square with other federal laws, which leave regulation of on-exchange derivatives trades exclusively to the [Commodity Futures Trading Commission].” She said the company is considering its options, including a possible appeal.
Robinhood also signaled the business stakes. According to the court record summarized by Reuters, the brokerage said it would lose substantial business if it could not route customer event contract orders through Kalshi. A Robinhood spokesperson said, “Robinhood has great respect for Native American tribes and their sovereignty.”
A bipartisan coalition of 27 states and Washington, D.C. backed the tribes in the appeal.
What comes next
The immediate effect of the ruling is that Kalshi cannot offer the sports event contracts at issue on the tribes’ lands while the case returns to the district court.
Kalshi may still seek further review. For now, the case adds to the growing patchwork of court and regulatory fights that could shape where prediction markets can operate and which authorities get to police them.
Source: As reported by Jonathan Stempel.
