Ninth Circuit Rules Against Kalshi in California Tribal-Land Prediction Market Dispute

The court concluded, at the preliminary-injunction stage, that the tribes were likely to succeed in showing that Kalshi’s sports-event contracts constitute Class III gaming activity under IGRA.²

The panel focused on how the transactions actually work.

A customer pays consideration, selects an outcome tied to a sporting event, and receives a reward if that outcome occurs.

The court also noted that Kalshi offered contracts involving point spreads, over/under totals, player propositions, and parlays.

In the court’s view, changing the product label from a sports wager to an “event contract” did not change the nature of the transaction for purposes of IGRA.

That holding is specific to the statutory framework the court was applying.

It should not be generalized into a rule that every prediction-market product is gaming under every law.

A central question was whether the transactions were located on Indian lands.

The Ninth Circuit held that they were when the user entered the event contract from tribal territory.³

The panel explained that the user’s physical location matters even if Kalshi’s headquarters or technical infrastructure are located elsewhere.

In practical terms: if a customer on tribal land uses the platform to enter a sports-event contract, at least part of the relevant gaming activity occurs on tribal land.

That location finding was critical because IGRA applies to gaming activity on Indian lands.

The tribes operate under federal secretarial procedures and tribal gaming ordinances that govern Class III gaming on their lands.

The Ninth Circuit concluded that those procedures allow Class III gaming only when it is tribally authorized and conducted through the tribal regulatory structure.⁴

Kalshi’s sports-event contracts were not authorized under those tribal ordinances.

The panel therefore held that the tribes had shown a likelihood of success on their claim that the contracts violated the governing IGRA framework when offered on tribal lands.

Kalshi argued that its status as a federally regulated derivatives exchange meant that federal commodities law controlled and displaced the tribes’ IGRA theory.

The Ninth Circuit rejected that argument.

The court explained that different federal statutes can govern different aspects of the same activity.⁵

The Commodity Exchange Act governs covered derivatives trading and the CFTC’s regulatory field.

IGRA separately governs Class III gaming activity on Indian lands.

The court’s broader point was straightforward: regulation under one federal statute does not automatically create immunity from every other federal statute that may apply for a different reason.

The panel concluded that the two statutes could operate together.

Kalshi also relied on the Unlawful Internet Gambling Enforcement Act, or UIGEA.

That statute contains a carveout for certain transactions conducted on federally regulated markets.

But the Ninth Circuit concluded that UIGEA does not displace IGRA.⁶

The court emphasized that UIGEA itself preserves the application of other federal, state, and tribal gaming laws.

The two statutes address different questions: UIGEA concerns payments connected to unlawful internet gambling; IGRA addresses Class III gaming activity on Indian lands.

The court therefore rejected the argument that the UIGEA carveout eliminated the tribes’ separate IGRA claim.

The tribes separately challenged advertising stating that sports betting was legal in all 50 states on Kalshi.

They argued that the statement was false or misleading advertising under the Lanham Act.

The Ninth Circuit rejected that theory.

The court treated the statement as a lay opinion concerning the legality of Kalshi’s products rather than an actionable representation of fact under the circumstances.⁷

The panel noted that the legality of the products remains unsettled.

That part of the district court’s ruling was affirmed. Businesses evaluating trademark and false-advertising issues should distinguish legal opinion from an actionable factual representation.

This is one of the most important parts of the case.

The Ninth Circuit did not enter a final injunction, decide the entire case on the merits, hold Kalshi unlawful nationwide, prohibit every prediction-market product, or rule that every Kalshi contract is illegal in California.

Instead, the court held that the tribes were likely to succeed on their IGRA theory for sports-event contracts entered from tribal lands.

The case was sent back to the district court to consider the remaining factors required for a preliminary injunction.

That procedural posture matters.

A finding of likely success at the preliminary-injunction stage is not the same thing as a final judgment after full litigation.

The broader business lesson extends beyond prediction markets and matters to startup and business transactions planning.

Startups often assume that compliance with one primary regulator settles the legal analysis. Sometimes it does not.

A company can simultaneously face federal regulatory requirements, separate federal statutes, state laws, contractual restrictions, licensing requirements, tribal law, advertising law, and industry-specific rules.

For founders, the practical question is not simply which agency regulates us. It is also what other legal regimes apply to the same product, transaction, customer, or location.

That is particularly important for businesses operating across jurisdictions or offering digital products that can be accessed from many different locations, including those confronting commercial and regulatory disputes.

Blue Lake Rancheria v. Kalshi illustrates a basic point about regulated businesses: federal regulation does not necessarily eliminate overlapping legal obligations.

The Ninth Circuit concluded that commodities regulation and IGRA addressed different legal questions and could apply at the same time.

For prediction markets, the decision is significant because it limits the argument that federal derivatives regulation alone resolves every legal issue surrounding sports-event contracts.

For other startups, the lesson is broader: a product can be validly regulated in one legal framework and still face restrictions under another.