Two California Tribes Block Kalshi Sports Event Contracts on Their Lands
On November 4th, U.S. District Judge Jacqueline Scott Corley granted a preliminary injunction requested by Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians, preventing Kalshi from offering sports-related event contracts on their lands while litigation continues. This follows a September ruling by the 9th U.S. Circuit Court of Appeals, which found that Kalshi’s contracts likely constitute Class III gaming under the Indian Gaming Regulatory Act (IGRA) when entered into from tribal lands.
The next day, the Commodity Futures Trading Commission (CFTC) issued guidance stating that federally regulated exchanges generally cannot restrict traders’ access based on location within the U.S. They gave exchanges 30 days to either eliminate domestic geographic restrictions (geofencing) or provide justification for non-compliance.
“Derivatives markets must operate on a uniform basis at a national scale to fulfill the purposes of the Commodity Exchange Act,” said CFTC Chairman Michael S. Selig. Geographic access restrictions are inconsistent with these purposes and the Act’s impartial access requirements.
The CFTC will consider individual cases before deciding on any action.
This development sparked criticism from tribal gaming leaders, who argue that prediction market operators are attempting to circumvent tribal and state gaming laws by framing sports wagers as federally regulated financial products.
“Tribes went to court to enforce the law and won an order stopping Kalshi’s unlawful sports betting on their lands,” stated James Siva, chairman of the California Nations Indian Gaming Association. “This vindictive assault against Indian Country erases any pretense that CFTC Chairman Selig will uphold his public and tribal trust responsibilities.”
Siva emphasized that the dispute revolves around tribes’ authority under IGRA to determine gaming activities on their lands.
“The CFTC cannot erase tribal sovereignty or give companies permission to ignore federal court orders,” he said, calling for the CFTC to withdraw the directive and for Congress to close what he termed a “gambling loophole.”
Sen. Adam Schiff, D-Calif., echoed these concerns, stating, “Sports prediction markets are sports bets. By effectively requiring prediction markets to offer contracts in all 50 states, even on tribal lands, the CFTC is once again violating state law and tribal sovereignty.”
The legal battle originated from a lawsuit filed by Blue Lake Rancheria and Chicken Ranch Rancheria against Kalshi and its affiliates.
In September, the 9th Circuit Court unanimously ruled that Kalshi’s sports event contracts qualify as Class III gaming under IGRA and are considered “located on Indian lands” when entered into from tribal territories. The court also found that the tribes were likely to succeed in demonstrating that the products violate their tribal gaming ordinances integrated into federal gaming procedures.
Kalshi has maintained that its event contracts are federally regulated derivatives under the Commodity Exchange Act and CFTC oversight. Following the 9th Circuit’s ruling, a company spokesperson told Reuters that reconciling the decision with federal laws governing derivatives was challenging.