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- A 9th Circuit panel revived two California tribes’ lawsuit against Kalshi, ruling its sports contracts resemble illegal gambling.
- The court remanded the case to district court, signaling that evidence may support an injunction against Kalshi’s contracts.
A 9th U.S. Circuit Court of Appeals panel revived a lawsuit by two California tribes against Kalshi, ruling that the platform’s sports event contracts can resemble gambling rather than a purely financial prediction market.
The decision matters because Kalshi’s sports-related contracts have become a flashpoint in the broader fight over whether federally regulated prediction markets can offer products that look and function like sports betting. The appellate court did not immediately block Kalshi’s contracts on tribal lands, but it sent the case back to district court and said the evidence may support an injunction.
The case was brought by Blue Lake Rancheria and Chicken Ranch Rancheria, which allege Kalshi has been conducting unauthorized gambling involving people on their reservations. A lower court had previously dismissed the suit after U.S. District Judge Jacqueline Scott Corley concluded that prediction markets did not constitute gambling.
Appeals court focuses on how the contracts work
Writing for a unanimous panel, Judge M. Margaret McKeown said that when a customer puts money at risk on an uncertain sporting outcome, the transaction resembles an ordinary bet.
The court pointed to a hypothetical involving a San Francisco Giants game and compared a $100 Kalshi contract with a sports wager on the same outcome offered by DraftKings. It also cited a Kalshi advertisement promoting the platform as a way to engage in sports betting in all 50 states.
According to the ruling, the tribes’ gaming ordinances do not authorize Kalshi’s sports contracts. That finding was central to the sovereignty dispute, which turns on whether the company’s federally overseen products intrude on tribal authority to regulate gambling on reservation lands.
Kalshi operates under the oversight of the Commodity Futures Trading Commission. The case therefore adds to a wider legal and regulatory fight over how sports-related event contracts should be treated under U.S. law.
What happens next for Kalshi and tribal gaming
The appellate panel stopped short of ordering an immediate halt to Kalshi’s offerings on tribal lands. Instead, it returned the case to district court for further proceedings, while signaling that an injunction could still be supported by the record.
Attorney Lester Marston, representing the tribes, said the ruling protects “their ability to make and enforce their own laws on their reservations.” He also said the dispute affects tribal finances and community services.
The tribes also drew outside support. California Attorney General Rob Bonta joined officials from 25 other states and the District of Columbia in a filing backing their position.
Robinhood Markets, which distributes Kalshi products and is also a defendant, disagreed with the ruling and said it was considering its next steps.
Kalshi’s next options, according to the report, include seeking a rehearing before a larger 9th Circuit panel or petitioning the U.S. Supreme Court.
Source: As reported by news.google.com.
