US court rules in favor of California tribes in Kalshi dispute
The ruling challenged the treatment of Kalshi’s sports contracts as federally regulated derivatives.
US.- The US Court of Appeals for the Ninth Circuit has ruled unanimously in favour of the Blue Lake Rancheria Indians and the Chicken Ranch Rancheria of the Me-Wuk Indians in their legal dispute with Kalshi and Robinhood over event contracts. The appellate court found that the tribes had valid grounds to argue that Kalshi’s sports-event contracts could violate their rights under federal law when offered on tribal lands.
The tribes maintain that they retain full sovereignty to regulate gambling activities within their territories. Their complaint alleges that Kalshi breached those regulatory rights by making its event contracts available across California. The lawsuit initially involved three tribes, but the Picayune Rancheria of the Chukchansi Indians withdrew.
A federal district court previously rejected the plaintiffs’ request for a preliminary injunction, determining that Kalshi was federally regulated and that its contracts qualified as derivatives covered by the Commodity Exchange Act (CEA). It also found that the Unlawful Internet Gambling Enforcement Act (UIGEA) and the CEA, rather than the Indian Gaming Regulatory Act (IGRA), governed Kalshi’s event contracts.
However, The Ninth Circuit has found that the tribes’ argument regarding protection under IGRA was valid. Judge Margaret McKeown said the tribes were likely to succeed in their claims that Kalshi’s sports-event contracts violated IGRA and their gaming rules and that the lower court was wrong to classify the contracts as federally regulated derivatives. The appeals court considered them “an act of placing a bet or wager.”
The ruling does not require Kalshi to stop offering its contracts in California for now. The appellate court has sent the case back to the lower court to consider the remaining claims
