The Ninth Circuit rules Kalshi sports contracts on tribal lands likely violate federal law News
Ralf Roletschek, CC BY-SA 3.0, via Wikimedia Commons
The Ninth Circuit rules Kalshi sports contracts on tribal lands likely violate federal law

The US Court of Appeals for the Ninth Circuit ruled Wednesday that Kalshi is likely violating federal law by allowing users to wager on sporting events from tribal land. The court held that two federally recognized California tribes, the Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians, were likely to succeed on claims that Kalshi’s “event contracts” constitute unauthorized gaming under the Indian Gaming Regulatory Act (IGRA). It reversed the district court’s denial of a preliminary injunction.

Kalshi is a derivatives exchange licensed by the Commodity Futures Trading Commission (CFTC). It offers “event contracts” characterized as swaps, a type of derivative based on real-world outcomes. These swaps include betting on sports match outcomes. Kalshi argued that the Commodity Exchange Act (CEA) preempts state regulations.

Sports betting is only legal in California on tribal lands, where tribes have the exclusive right to regulate gaming activity. Under IGRA, Class III gaming, which includes casino-style activities and sports betting, is lawful on Indian lands only if authorized by tribal ordinance and conducted under a tribal-state compact or secretarial procedures. The tribes argued that when users enter these contracts while physically on tribal lands, the activity is functionally sports betting without authorization in violation of IGRA.

The court took a functional approach, understanding IGRA as regulating the actual activity regardless of labels. The court found that, no matter how Kalshi labels its product, Kalshi explicitly advertises sports betting to consumers and the resemblance of Kalshi’s event contracts to traditional sports bets is “overwhelming.”

Because users can enter the contracts from tribal lands without tribal authorization, the court concluded the tribes were likely to succeed on the merits of their claim that the activity violates their secretarial procedures. The court found that the CEA’s jurisdiction did not extend to Kalshi’s sport event contracts, as IGRA governs gaming activity located on Indian lands. IGRA therefore provides a cause of action to enjoin the activity, which the lower court improperly denied.

Tribal gaming generated $43.9 billion in 2024, providing essential revenue for many Native communities. After tribes began using gaming in the 1970s to fund tribal governments, the Supreme Court in California v. Cabazon Band of Mission Indians (1987) held that tribes could offer games on their lands free from state regulation if the state permits that form of gaming. In response, Congress passed IGRA in 1988 to promote tribal economic development, self-sufficiency, and strong governments.

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