Kalshi and Robinhood Move to Dismiss California Tribes' Lawsuit
Kalshi and Robinhood have asked a judge to throw out a lawsuit brought by three California tribes. This is part of an ongoing legal battle over whether prediction markets are deemed illegal gambling under the Indian Gaming Regulatory Act (IGRA).
The prediction market app operators assert that the filings directly go against what the tribes stated in their July complaint to the US District Court for California.
The Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians all started the case. They also run licensed casinos and sportsbooks in California. The tribes said that Kalshi and Robinhood's event contracts are illegal sports betting that breaks both federal and tribal gaming laws.
They are seeking an injunction to halt such activity on tribal land, asserting that these digital prediction markets bypass state and federal gaming oversight.
Kalshi and Robinhood say that their products don't count as "gaming" under IGRA, so they aren't subject to tribal law. Kalshi said that the Commodity Futures Trading Commission (CFTC) regulates the market and that federal oversight is more important than tribal claims.
Both companies also denied the racketeering charges, saying that no form of wire fraud took place, stressing that they followed federal derivatives laws.
The motions are mostly the same as the arguments that were made during the preliminary injunction phase. If they win, they could end the case early, which could impact how people think about how prediction markets work with tribal and federal law in the future.
Robinhood expands rapidly
While the legal battle continues, Robinhood's prediction market operations are growing rapidly. During the company's third-quarter earnings call on 5 November, Chairman and CEO Vlad Tenev said prediction markets could evolve into one of the largest asset classes.
Since debuting its first markets tied to the presidential election last year, the company has doubled its trading volume each quarter, reaching 2.3 billion event contracts in the third quarter and 2.5 billion in October alone.
Tenev said prediction markets allow participants to "price risk in pretty much anything," describing the space as a significant new opportunity for Robinhood. The company has since expanded its offerings beyond politics to include sports, economics, and culture.
According to its latest presentation, prediction markets have already become one of Robinhood's business lines, generating over $100 million in annualized revenue, reaching that milestone in less than a year. Tenev said the segment is now tracking toward a $300 million annual run rate.
The company now operates 11 business lines exceeding $100 million in annualized revenue, underscoring its strategy of diversification and rapid product development. Tenev said Robinhood's focus remains on increasing market share among active traders and strengthening its position within the broader financial ecosystem.
