27 States Back California Tribes Suing Kalshi Over Sports Contracts Under Indian Gaming Law
Three California tribes — Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians — are separately challenging Kalshi's sports event contracts in the Ninth Circuit under the Indian Gaming Regulatory Act, a federal law distinct from the Commodity Exchange Act preemption arguments at issue in Nevada, New Jersey, and Connecticut. The Ninth Circuit refused to consolidate the tribal case with the Nevada case. A Ninth Circuit panel appeared skeptical of Kalshi in July hearings, and 27 states plus the District of Columbia have filed amicus briefs supporting the tribes. The IGRA theory, if it succeeds, could block Kalshi from operating sports contracts in any state where tribal gaming compacts exist — a category that includes most US states.
Three federally recognized California tribes — Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians — are pursuing a separate Ninth Circuit lawsuit against Kalshi grounded in the Indian Gaming Regulatory Act, not the Commodity Exchange Act preemption theory that defines the Nevada, New Jersey, Connecticut, and Michigan litigation. The distinction matters: the CEA/swap legal theory asks whether sports event contracts are federally regulated financial instruments that displace state gambling law. The IGRA theory asks a different question — whether offering sports wagering products outside the framework of tribal gaming compacts violates the exclusive gaming rights that federally recognized tribes hold under a 1988 federal law. If the IGRA theory succeeds, Kalshi could face an injunction not because it is unlicensed under a state gambling statute but because it is interfering with the sovereign gaming rights of federal treaty partners.
The Ninth Circuit declined to consolidate the tribal case with the Nevada case that produced the August 28 3-0 ruling. The two cases were argued before different panels and proceed separately. The Nevada case turned on the CEA swap definition. The tribal case turns on IGRA's exclusivity provisions: California tribes hold exclusive rights to certain gaming activities under their state-tribal compacts; the tribes argue Kalshi's sports outcome contracts fall within the scope of that gaming exclusivity. A Ninth Circuit panel that heard arguments in the tribal case in July appeared skeptical of Kalshi's defense, according to reporting from legal observers present. Skepticism in oral argument is not a ruling, but the panel's questioning focused on whether the CFTC's designation of Kalshi as a designated contract market could override IGRA exclusivity — a question to which Kalshi's counsel did not appear to have a ready answer. The IGRA preemption question is separate from the CEA preemption question, and the August 28 ruling against Kalshi on the Nevada/CEA theory does not automatically resolve the tribal case.
The amicus support from 27 states and the District of Columbia filing briefs in favor of the tribes is a significant indicator of how broadly state governments view the prediction market question. Amicus filings from more than half of US states plus DC are rare in commercial litigation; they signal that state AGs across the country — including states with no active prediction market enforcement action — view the tribal gaming exclusivity question as implicating their own regulatory interests. The tribal gaming framework exists in all US states where federally recognized tribes have compacts, which covers most of the country. If the Ninth Circuit rules that IGRA exclusivity provisions apply to Kalshi's sports contracts in California, the reasoning could be extended to tribes in Nevada, Wisconsin, Michigan, Oklahoma, and dozens of other states. The 27-state amicus coalition suggests that other states see the tribal case as potentially delivering a national result through a different legal vehicle than the state-enforcement CEA cases.
The IGRA legal theory is potentially more durable than the state-enforcement CEA cases because it does not depend on how the Supreme Court ultimately resolves the swap definition question. If SCOTUS eventually rules that sports event contracts ARE swaps under the CEA — vindicating Kalshi's preemption argument and invalidating state enforcement actions — the IGRA question would survive. Congress specifically gave tribes exclusive gaming rights under IGRA; whether a CFTC-licensed DCM can displace those rights raises a separate question about the hierarchy of federal law rather than whether the CEA preempts state gambling statutes. Kalshi's CFTC designation gives it a federal license to list event contracts as financial instruments; whether that license overrides a competing federal tribal gaming compact is a question neither the CFTC nor the courts have definitively answered. The Ninth Circuit's tribal case may produce the first authoritative answer to that question, with implications for every prediction market platform operating sports contracts in any state with significant tribal gaming presence.
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