California Court Rejects Request to Ban Kalshi on Tribal Lands

Kalshi picked up a badly needed win this week.

The United States District Court for the Northern District of California has rejected a group of tribes’ request to ban the platform on their lands. The lawsuit alleged that Kalshi’s sports prediction markets constitute sports betting and are accessed by users on tribal lands, including areas with some of the best California sportsbooks. This violates the Indian Gaming Regulatory Act, justifying a ban.

Unfortunately for the tribes, the court rejected their argument. The ruling found that the tribes involved did not meet the burden of proof for Kalshi’s violation of IGRA. Furthermore, the court found that IGRA does not apply to Kalshi’s operations, as those are governed under the Unlawful Internet Gambling Enforcement Act (UIGEA). 

By ruling that Kalshi’s controversial markets fall under UIGEA, the court confirmed that it does not consider them to be gambling. Instead, it believes the markets remain protected under the Commodity Exchange Act, making them a form of trading.

The tribes did not challenge Kalshi’s status as a registered commodity trading platform in their court filing.

The win comes at an excellent time for Kalshi. The operator is mired in lawsuits with state regulators and tribes over their sports prediction markets, and rulings have not been going their way. The company also saw board member Brian Quintenz lose his nomination to lead the Commodity Futures Trading Commission (CFTC). 

Big Win for Prediction Markets

Kalshi isn’t the only winner from the California court’s ruling. 

While the California tribe’s were focused on Kalshi, their legal strategy would have delivered a blow to all sports prediction operators. Had the court determined that Kalshi was violating IGRA, it would have set a precedent for the entire industry. That means they would need to invest millions into geo-fencing tribal lands and risk massive penalties for any violations.

Tribal gaming groups across the US have begun pursuing similar lawsuits against operators to the one in California. With the recent ruling, those lawsuits face an even more challenging road to success.