Ninth Circuit Rules Against Kalshi in California Tribes Legal Battle

The U.S. Court of Appeals for the Ninth Circuit has issued another ruling that isn't good news for Kalshi as it tries to offer sports contracts while being federally regulated nationwide. 

The Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria tribes of California filed a lawsuit earlier this year against Kalshi, alleging it violated the Indian Gaming Regulatory Act by offering what the tribes considered sports betting on their land. 

Last November, the Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk tribes were denied a preliminary injunction. On Wednesday, the Ninth Circuit affirmed that decision in part, reversed it in part, and sent the case back to the district court for further consideration.

Ninth Circuit Says Kalshi Contracts Qualify as Class III Gaming

This also follows a Ninth Circuit ruling that the Nevada Gaming Control Board could treat Kalshi sports contracts as sports betting. However, that ruling and now this one with California go against the Third Circuit ruling in favor of the prediction market platform. 

So, the Supreme Court is increasingly likely to step in. 

Despite this ruling, though, Kalshi doesn't have to stop offering sports contracts on tribal lands. 

Under the IGRA, class III gaming is defined as “all forms of gaming that are not class I gaming or class II gaming,” and it's broad enough that sports event contracts fall under it. 

The court said that “the similarities between a sports event contract, which even Kalshi calls ‘sports betting,’ and a traditional sports wager are overwhelming.”

The court also offered this example: 

"Imagine a user standing on the floor of the Blue Lake Casino Hotel who downloads Kalshi and DraftKings, a classic online sports betting app. On Kalshi, she buys a $100 contract that pays if the San Francisco Giants win. On DraftKings, she wagers $100 on the same outcome. The bettor, the place, the stake, and the contingency remain the same. Only Kalshi’s vocabulary changes.

"Kalshi may reshuffle the cards, but it cannot change the hand: Its sports event contracts are class III gaming."

Tribes' Lanham Act Claim Falls Short

These California tribes wanted Kalshi held accountable for an advertisement claiming sports betting was available in 50 states. However, because Kalshi's legality is unsettled, the tribes have no viable Lanham Act claim.