In what could prove a turning point for prediction-market platform Kalshi, three California tribes filed an injunction with a federal court in the Northern District of California, hoping to keep Kalshi from offering sports betting in the Golden State.
The Sept. 4 court document shows that Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians tribes are invoking the Indian Gaming Regulatory Act (IGRA) and the state’s Tribal-State Gaming Compacts in seeking the injunction.
The injunction, in addition to aiming to immediately stop Kalshi from offering sports events contracts in California, seeks to prevent Kalshi from marketing that its prediction markets are “legal in all 50 states.”
Kalshi could be undercutting legal claims
In July, the same entities filed a lawsuit against Kalshi and Robinhood.
“Kalshi will claim that it is not offering sports gambling. Kalshi will tell the court that it is a Designated Contract Market, regulated exclusively by the Commodity Futures Trading Commission, and is merely operating a ‘prediction market’ that permits the buying and selling of ‘commodities contracts,’ or swaps on sporting events. While masquerading as novel commodities and futures products, these event contracts are, substantively, nothing more than illegal, unregulated wagers on the outcomes of sporting events.”
Sports gambling lawyer Daniel Wallach told Front Office Sports that this could be a “major turning point” for Kalshi because the plaintiffs are invoking federal law vs. state law. He added, regarding marketing that helped them garner $27 million in trading volume in Thursday’s National Football League season opener between the Dallas Cowboys and Philadelphia Eagles, “They’ve gotten a little over their skis with their marketing, which undercuts their legal claims.”
The July lawsuit against Kalshi and Robinhood invoked the Racketeer Influenced and Corrupt Organizations Act as well as the IGRA, claiming that both entities engaged in false advertising, with the suit reading in part:
“Under the IGRA, if the gaming activity is not specifically prohibited by federal law and is conducted within a state which does not, as a matter of criminal law and public policy, prohibit such gaming activity, Indian tribes and the National Indian Gaming Commission have the exclusive right to regulate Class II gaming on Indian lands; and the Indian tribes and the states, pursuant to a compact, have the exclusive right to regulate Class III gaming on Indian lands.”
Per the IGRA, sports betting qualifies as Class III gaming.
