Ninth Circuit Judges Press Kalshi on Why Sports Contracts Aren’t Just Betting in Tribal Lands Appeal
A Ninth Circuit panel spent much of Friday’s oral argument questioning why Kalshi’s sports-based event contracts should be treated differently from traditional sports wagers when accessed from tribal land.
The hearing centered on an appeal brought by three California tribes: Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians. All three sought to reverse a lower court’s refusal to block Kalshi’s sports contracts from reaching their reservations.
One judge stated directly that Kalshi’s contracts sound like a bet subject to Native American gambling laws. Another suggested it would not be unreasonable to exclude tribes from federal oversight in this area. The panel did not rule from the bench and gave no timeline for a decision.
The case is analytically distinct from the state-court battles that have dominated coverage of prediction markets. This hearing turns on the Indian Gaming Regulatory Act rather than the Commodity Exchange Act preemption arguments at the center of the Sixth Circuit litigation. IGRA gives tribes the authority to regulate Class III gaming on their lands under federal compacts. If sports-event contracts qualify as Class III gaming under IGRA, the federal license Kalshi holds from the CFTC provides no shield against tribal enforcement. The two regulatory frameworks are largely independent of each other, but could create something of a catch-22.
The Journey to the Appeals Court
U.S. District Judge Jacqueline Scott Corley denied the tribes’ preliminary injunction request in November, finding they had not shown sufficient likelihood of success on the merits. Corley concluded that the tribes had not identified specific language in their gaming compacts that would bar Kalshi’s contracts, and she found the Unlawful Internet Gambling Enforcement Act, rather than IGRA, to be the more applicable federal framework for evaluating the online transactions at issue.
The tribes appealed, arguing Corley’s reasoning ignored the practical reality that Kalshi’s sports contracts function identically to sports wagers for any user accessing the platform from tribal land. The Ninth Circuit panel’s questions on Friday suggest that at least some of the judges found the functional equivalence argument more persuasive than Corley did.
A reversal would not permanently resolve the underlying dispute. It would most likely send the injunction question back to Corley for reconsideration under a revised legal standard, requiring her to reassess both the tribes’ likelihood of success on the merits and their showing of irreparable harm. The underlying district court case remains stayed pending the Ninth Circuit’s decision.
Two Circuits, Same Skepticism, Different Legal Theories
The Ninth Circuit hearing lands on the same day the prediction markets litigation calendar reaches another inflection point: today, Monday, July 13, is exactly 17 days before the Sixth Circuit’s scheduled oral arguments in Cincinnati on July 30, where the consolidated Ohio and Tennessee appeals will be heard. Both appellate courts are now actively examining Kalshi’s legal position. Both appear skeptical, though for reasons rooted in different statutes.
The Sixth Circuit proceedings turn on whether Kalshi’s sports event contracts qualify as swaps under the Commodity Exchange Act and, if so, whether CFTC jurisdiction preempts state gambling law. The Ninth Circuit proceedings turn on whether those same contracts constitute Class III gaming under IGRA when accessed from tribal land, a question the CFTC license does not directly answer. A platform can simultaneously be a federally licensed exchange and an unauthorized gaming operator on tribal land.
This is the same dynamic we covered earlier this year, when the Cayuga Nation sued Caesars over online sports betting accessed from tribal land. The tribal sovereignty layer of the prediction markets regulatory fight has been developing in parallel to the state preemption fight, and Friday’s Ninth Circuit arguments suggest the appellate courts take both theories seriously.
California Tribes Are Playing a Longer Game With Massive Implications
The stakes extend well beyond these three tribes. California’s broader tribal gaming coalition has positioned the rapid growth of prediction markets as a central threat to their sovereignty and revenue base. Tribal leadership recently reaffirmed plans to pursue a 2028 ballot initiative for tribally operated sports betting, in part in response to platforms operating in what tribes describe as a regulatory gray zone on their lands.
California is the country’s largest sports betting market, but it has not yet legalized the activity. The state’s tribes have spent years blocking legislative efforts to legalize sports betting through non-tribal channels, arguing the tribes have the exclusive right to offer sports wagering under existing compacts. Kalshi’s operation, available to any California resident, including those on tribal land, complicates that position in a way that tribal leaders find directly threatening.
The 2028 ballot initiative plan is not primarily a response to prediction markets, but prediction markets accelerate its urgency. If a federally licensed exchange can offer sports contracts to California users without tribal involvement and without state sports betting legalization, the tribes’ leverage in the ballot initiative campaign weakens. The Ninth Circuit case is not just about these three tribes’ lands. It is a piece of a much larger strategic fight over who controls sports wagering in the country’s most valuable untapped market.
The New Jersey Supreme Court filing we covered last week, now docketed with a petition deadline of August 4, adds a third appellate thread. Whether the Ninth, Sixth, or Third Circuit issues the first definitive appellate ruling on prediction markets’ legal status, and which of those rulings the Supreme Court uses as its vehicle for ultimate review, is the central strategic question for the industry’s second half of 2026.
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