Two California tribes secured a major legal win against Kalshi and Robinhood Wednesday, as the U.S. Court of Appeals for the Ninth Circuit overturned a district court opinion that allowed prediction markets to offer sports event contracts on tribal lands.
The decision does not immediately ban sports contracts on tribal lands, but sends the decision back to the district court, after determining that the Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians are likely to win on the merits.
In overturning the main legal victory for prediction markets over tribes, the case also adds to Kalshi’s courtroom losing streak. It may also move the questions over the legality of sports event contracts closer to the Supreme Court.
Overturns district court
The Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians, alongside the Picayune Rancheria of the Chukchansi Indians, sued Kalshi and Robinhood in July 2025, arguing that the companies’ sports event contracts were illegal Class III gaming under the Indian Gaming Regulatory Act (IGRA). The Picayune Rancheria later withdrew from the lawsuit.
The U.S. District Court for the Northern District of California had ruled in the prediction markets’ favor, determining that while the prediction markets’ sports event contracts might be against the spirit of the law, they were not against the letter.
“By self-certifying the legality of its event contracts in a way that insulates its activities from judicial review, Kalshi may have found a way around prohibitions on interstate gambling that were created with the Tribes’ best interest in mind,” District Court Judge Jacqueline Scott Corley wrote in her opinion. “But, on the record currently before the Court, and in light of the Commodity Exchange Act’s self-certification process, Plaintiffs have not met their burden of showing a likelihood of success.”
25-7504-1However, the Ninth Circuit overruled that view. Its three-judge panel of Chief Judge Mary H. Murguia alongside judges M. Margaret McKeown and Richard A. Paez unanimously agreed to overturn the order denying an injunction blocking Kalshi and Robinhood from operating on the tribes’ lands. They determined that the tribes were likely to win on the merits. The three-judge panel was a different group than the one that ruled in late August that Nevada could enforce its gambling laws on Kalshi.
Judge McKeown, author of Wednesday’s opinion, wrote, “The panel held that the tribes were likely to succeed in their claims that Kalshi’s sports event contracts on tribal lands violated IGRA and the tribes’ gaming ordinances.”
Not an immediate ban
The opinion does not immediately force Kalshi to stop offering sports contracts on the tribes’ lands.
Instead, the Ninth Circuit sent the case back down to the district court. Injunctions face a four-part test: likelihood of success on the merits, irreparable harm if an injunction is granted or denied, the balance of hardship if an injunction is granted or denied, and the public interest.
Success on the merits is usually the most important factor, and the circuit court specifically highlighted that fact, but the district court could still deny the injunction if it feels that the harms and public interest arguments — known as the Winter factors — in the prediction markets’ favor are strong enough.
“As we have reiterated time and again, likelihood of success on the merits is the most significant factor in evaluating a motion for preliminary injunction,” reads the opinion. “Because the Tribes are likely to prevail on their claims under IGRA, we remand as to that claim with instructions ‘to reach the remaining Winter factors in the first instance.’”
If the district court grants the injunction, Kalshi and Robinhood would have to stop offering their sports event contracts on the two tribes’ land, and other tribes would be better placed to obtain similar injunctions.
Different to Kalshi vs. state lawsuits
The lawsuit differs from Kalshi’s litigation against states, such as the case between Kalshi and Nevada, where the Ninth Circuit also ruled against the prediction market. The lawsuits brought by states deal with questions of whether the federal Commodity Exchange Act (CEA) preempts state gambling laws and whether Kalshi’s sports contracts qualify for any preemption that exists. On the other hand, the tribal lawsuits deal with interactions between two federal laws — the CEA and IGRA — and whether one overrules the other.
The Ninth Circuit determined that the two laws can coexist.
“Because IGRA and the CEA are not ‘irreconcilable,’ we must harmonize them,” the court said.
“In so doing, we conclude that the two statutes simply address two different questions. The CEA gives the Commission ‘exclusive’ jurisdiction over covered derivatives trading on designated contract markets. IGRA governs Class III gaming activity located on Indian lands.
“The former statute may determine when a contract can trade on a DCM [designated contract market]. It does not determine whether the same transaction, when offered to users on Indian lands, satisfies IGRA’s separate requirements.”
Court rejects ‘no business on Indian lands’ claim
A key part of Kalshi’s argument was that it did not actually do business on Indian lands. The business said that as it is based in New York, its sports contracts are not offered on tribal land.
It argued that the only law that governed gambling based on where it was offered was the Unlawful Internet Gambling Enforcement Act (UIGEA), which includes a carve-out for DCMs registered with the Commodity Futures Trading Commission (CFTC).
However, the Ninth Circuit rejected that argument. It noted that UIGEA was intended only to enforce laws that were already on the books by allowing the government to take action against illegal gambling payment providers. As a result, the idea that gambling laws can be enforced based on the location where bets are made was not something that only existed due to UIGEA.
“The panel held that the best reading of the two interrelated statutes is that IGRA provides a cause of action to enjoin Class III gaming activities conducted improperly and at least in part on Indian lands, while UIGEA governs payments connected to unlawful internet gambling,” the Ninth Circuit opinion said.
The Ninth Circuit opinion noted that UIGEA specifically included a passage making clear that it was about enforcement of existing gambling laws and did not change what was considered illegal gambling.
“Kalshi’s argument confers upon the UIGEA a displacing effect that Congress expressly denied it,” the court said. “The statute disavows any intent to ‘alter, limit, or extend‘ existing federal, state and tribal gaming regulations.”
The court also pointed to a 2018 opinion in State of California v. Iipay Nation of Santa Ysabel, where it had ruled that a federally recognized tribe cannot operate an online bingo website that accepts bets from players located off tribal lands.
“In harmonizing IGRA with the UIGEA, we have explained that where ‘the act of placing a bet or wager’ takes place in a state that prohibits a form of betting but an online gaming server is located on Indian lands, ‘the bets are not legal in the jurisdiction where they are initiated’ and are thus illegal under the UIGEA,” the court said. “Kalshi may be headquartered in New York, and its back-end infrastructure may sit off Indian lands, but a Kalshi consumer can still enter an event contract on Indian lands if she purchases one while on a reservation.”
Violating ordinances
An additional element of the district court opinion in the prediction markets’ favor was that the secretarial procedures that govern the tribes’ gaming offerings — similar to a tribal compact — do not actually contain any text that says another company can’t offer online gambling on their lands.
Kalshi and Robinhood argued that even if they were determined to be offering gaming on tribal lands, this would only violate ordinances, which are not the same as a compact or secretarial procedure.
However, the Ninth Circuit noted that the secretarial procedures say that Class III gaming may only be offered in accordance with the ordinances, meaning that a violation of the ordinances would be a violation of the procedures.
“Because the secretarial procedures in this case depend on and incorporate the Tribes’ ordinances, and Kalshi’s sports event contracts are not authorized by those ordinances, those contracts are also ‘in violation of’ the compact and procedures,” the court said.
The prediction markets also argued that they could not be in violation of the procedures because they were not a party to them. During oral arguments, Kalshi lawyer Grant Mainland said, “Not once has IGRA been used in the manner proposed here.”
The court rejected this idea too, arguing that it rests on the false assumption that a compact is the exact same thing as a contract.
“A compact certainly has contractual features, and the general rule that a contract cannot bind a nonparty would carry substantial force if the Tribes sought contractual relief from Kalshi. But the Tribes do not seek contractual relief,” the Ninth Circuit’s opinion said. “They seek an injunction against unlawful Class III gaming activity that violates the secretarially approved regime on their lands.”
Kalshi wins Lanham Act argument
The court did side with Kalshi on the tribes’ claim that the prediction market had violated the Lanham Act on false advertising by claiming its products were legal, but the tribes did not need a win there to get the injunction.
The Ninth Circuit said “a lay opinion about the contracts’ legality cannot support a Lanham Act claim.”
Tribal gaming leaders welcomed the decision. On a Wednesday webcast of The New Normal, tribal attorney Scott Crowell noted that judges’ decisions were piling up overwhelmingly against the legality of sports event contracts. The Third Circuit’s opinion in favor of Kalshi and against New Jersey in April now appears to be an anomaly.
“I think we are in a far more likely than not scenario for the Supreme Court to hear this as early as next session, but instead of there being a genuine split, you’re now seeing a wall of authority in favor of the tribes and states with the NJ decision being an outlier,” he said.
New Normal host Victor Rocha added, “There might be some cover now for tribes to get a little more aggressive in defending their jurisdiction.”
Elsewhere in the country, tribes in Wisconsin and New Mexico are also suing Kalshi.
