Federal Judge Denies Tribal Bid to Halt Kalshi's Event Contracts
Kalshi has been given a reprieve in one of its legal battles.
A California federal judge has rejected an attempt by three Native American tribes to block their sports-related event contracts, ruling that the prediction market apps' operations do not violate tribal gaming laws.
US District Judge Jacqueline Scott Corley denied a motion for a preliminary injunction from Blue Lake Rancheria, Chicken Ranch Rancheria of the Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians. The tribes had accused Kalshi, along with Robinhood Derivatives LLC and Robinhood Markets Inc., of offering illegal Class III gambling and falsely advertising that its platform was "legal in all 50 states."
Corley found that the tribes failed to demonstrate a likelihood of success under either the Indian Gaming Regulatory Act (IGRA) or the Lanham Act. She ruled that Kalshi's "yes/no" contracts on sporting outcomes are regulated under the Commodity Exchange Act (CEA), not IGRA, which governs casino gambling on tribal lands.
The judge said that Kalshi's status as a federally registered exchange with the Commodity Futures Trading Commission (CFTC) meant its contracts did not fall within the definition of "unlawful internet gambling" under the Unlawful Internet Gambling Enforcement Act.
Corley also stated that Kalshi's online marketing did not mislead customers or encourage individuals under 18 to join, as neither Kalshi nor the tribes allow users under 18. She emphasized that the CFTC has the authority to enforce these contracts and is the sole body empowered to do so.
Corley concluded that while she understood why people were worried about Kalshi's ability to self-certify its event contracts, she thought that the CFTC or Congress, not the courts, should address the broader policy issues surrounding prediction markets.
NCAA questions Kalshi's college sports oversight
Despite the ruling, Kalshi still faces other legal and PR controversies. At the end of October, the NCAA sent a formal letter to Kalshi raising questions about how the company safeguards the integrity of collegiate sports markets.
NCAA Chief Legal Officer Scott Bearby asked how Kalshi monitors prohibited customers, whether it reports suspicious activity, and if it would cooperate in NCAA investigations. The letter also requested clarification on language on the website that the NCAA said could imply an affiliation between the two organizations.
The NCAA expressed concern that Kalshi's prediction markets, particularly those resembling proposition bets, could increase risks of match manipulation and harassment of student-athletes.
In a statement to ESPN, a Kalshi spokesperson said the firm "values the NCAA's feedback" and is reviewing its site language and other requests. Kalshi maintains that its federally licensed status includes "robust market integrity provisions."
Kalshi and other prediction markets have grown over the past year, making them regulated alternatives to traditional sportsbooks. But the company still has problems with state gambling regulators, who say that its event contracts break local betting laws.
