A federal appeals court has handed two California tribes a significant victory in their challenge to Kalshi, ruling that the company’s online sports event contracts likely violate federal Indian gaming law when accessed from tribal lands.
In a unanimous decision issued Sept. 16, the U.S. Court of Appeals for the Ninth Circuit reversed part of a lower court ruling that denied preliminary injunctive relief to Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians.
The tribes sued Kalshi and Robinhood, arguing that contracts allowing customers to place money on the outcomes of sporting events constitute unauthorized Class III gaming under the Indian Gaming Regulatory Act, or IGRA.
The appellate court concluded that the tribes were likely to succeed on their IGRA claims. It found that Kalshi’s sports event contracts constitute Class III gaming activity and that the activity is located on Indian lands when users enter into the contracts from tribal territory.
The court also rejected Kalshi’s argument that federal commodities law displaces IGRA in this context. Kalshi maintains that its contracts are financial products regulated exclusively by the Commodity Futures Trading Commission, not gambling subject to tribal or state regulation.
“The CEA and IGRA address two different questions,” Judge M. Margaret McKeown wrote for the panel. The Commodity Exchange Act regulates derivatives trading on designated markets, while IGRA governs Class III gaming activity on Indian lands.
The Ninth Circuit sent the case back to the federal district court to evaluate the remaining requirements for issuing a preliminary injunction. The ruling does not finally resolve the lawsuit. The appellate court also upheld the rejection of the tribes’ false-advertising claim under the Lanham Act.
Although the decision arose in California, it addresses many of the same questions presented in a separate lawsuit brought by the Ho-Chunk Nation in Wisconsin.
The Ho-Chunk Nation sued Kalshi and Robinhood in August 2025, alleging that their sports event contracts amount to unauthorized gaming when accessed from the Nation’s lands. The Nation argues that the activity violates IGRA, interferes with its sovereign regulatory authority, and diverts revenue that supports tribal government programs and services.
In May, U.S. District Judge William Conley allowed the Nation’s central IGRA claims against Kalshi to proceed. Conley found that the Nation demonstrated a likelihood of success on those claims but denied its request for a preliminary injunction because it had not shown irreparable harm. The court dismissed Robinhood from the lawsuit, along with the Nation’s false-advertising and racketeering claims.
On Sept. 11, Conley certified two legal questions for a potential immediate appeal to the Seventh Circuit. Those questions concern whether violations of tribal gaming ordinances are actionable under IGRA and whether the Commodity Exchange Act prevents tribes from challenging contracts traded on federally regulated markets.
Kalshi must ask the Seventh Circuit for permission to pursue that appeal. The Wisconsin court ordered the case stayed if the company seeks appellate review expeditiously.
Because Wisconsin falls within the Seventh Circuit, the Ninth Circuit’s decision is not binding in the Ho-Chunk Nation case. It may nevertheless provide persuasive support because the California court rejected many of the same arguments Kalshi is making in Wisconsin.
Kalshi has maintained that its products are federally regulated event contracts, not sports bets. A company spokesperson told Reuters that Kalshi may appeal the Ninth Circuit ruling.
The cases are part of a widening national dispute over whether prediction markets can offer sports-related contracts without complying with state and tribal gaming laws—and whether federal commodities regulation overrides the sovereign authority tribes exercise over gaming on their lands.
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