Kalshi wins injunction battle against California tribes over sports prediction markets

• A federal judge denies a preliminary injunction sought by three California tribes against Kalshi’s sports event contracts on tribal lands.
• Tribes argue that Kalshi violates the Indian Gaming Regulatory Act (IGRA) and tribal exclusivity agreements.
• Kalshi asserts its contracts are federally regulated financial instruments, not traditional betting, continuing operations amid legal challenges.

Three California tribes have been denied a preliminary injunction to stop prediction market operator Kalshi from offering sports event contracts on their reservations.

U.S. District Judge Jacqueline Corley ruled against the tribes’ request, allowing Kalshi to continue its operations on tribal lands pending the lawsuit’s outcome.

Tribes’ sovereignty and exclusivity claims

The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians filed the lawsuit in July 2025.

They argued Kalshi’s sports contracts violate their exclusive rights to regulate gambling under the Indian Gaming Regulatory Act (IGRA) and the tribes’ compacts with California.

As tribal spokesperson Lester Marston emphasised:

“Gaming revenues are crucial for necessities on the reservation. We are not like Kalshi; our intent is not merely profit. All funds are directed towards the [tribal] government.”

Marston accused Kalshi of offering illegal gambling on reservations without tribal approval, breaching Section 2710 of IGRA, which requires tribal and state approval for gaming on reservation land.

Judge Corley’s judicial remarks and reasoning

During the hearing, Judge Corley expressed scepticism towards Kalshi’s persistence on tribal lands, observing:

“There have been enough fights in our country with the Indians, and maybe we don’t need any more.”

Judge Corley questioned why Kalshi insisted on operating, stating:

“They aren’t demanding much. Tribes are sovereign, so why persist?”

Despite acknowledging these moral and sovereignty issues, Corley focused on legal standards, concluding the tribes had not demonstrated a likelihood of success sufficient to justify the injunction.

Judge Corley noted:

“I can’t fathom why Kalshi is pursuing this when the tribes oppose it. You might be correct, but being correct doesn’t justify the action.”

Kalshi’s defence and broader regulatory context

Kalshi, supported by its futures commission market partner Robinhood, contends its sports event contracts are federally regulated financial instruments overseen by the Commodity Futures Trading Commission (CFTC), not traditional sports betting governed by IGRA or state gaming law.

Their lawyer argued:

“In traditional sports betting, commercial operators benefit when players lose, but on Kalshi’s platform, the company is indifferent to the outcome, as traders engage with one another.”

The company insists its “intent is not to undermine sovereignty; it is to operate a business.”

This ruling occurs amid ongoing litigation involving Kalshi across multiple states, including Maryland, New Jersey, and Nevada.

Courts have issued conflicting decisions on Kalshi’s operations, with the core dispute centred on whether the contracts constitute gambling under IGRA or federally protected financial products. This legal ambiguity awaits potential Supreme Court clarification.

Tribal officials also highlighted concerns about Kalshi’s advertising, accusing the company of deceptively promoting legal betting in all 50 states, resulting in money being wagered off tribal lands.

Marston remarked, “As a result of deception, they are spending it not on the reservation.” Judge Corley acknowledged this point, saying, “If you use money to gamble on the app and not come to the casino, that is harm.”

The tribes have sought support from California Attorney General Rob Bonta but have not received relief, with the office managing other gambling-related regulatory issues.

Kalshi declined to withdraw operations despite these challenges, raising questions about enforcement capabilities and the future regulation of prediction markets on sovereign territories.

Following the decision, a Kalshi spokesperson said:

“We welcome today’s decision denying the plaintiff tribes’ motion for a preliminary injunction. Kalshi’s nationwide, federally-regulated exchange offers all users a fair and transparent way to trade event contracts. Casinos located on tribal lands offer their customers a fundamentally different product.”

Implications for market regulation

This decision shows ongoing tensions between tribal sovereignty, state and federal laws, and the regulation of emerging gaming and financial technologies. While Kalshi can continue operating for now, the case highlights unresolved questions about the legal status of prediction markets and their impact on tribal gaming revenue.

The outcome of this case will be closely watched by tribal nations, regulators, operators, and investors. It may influence future regulatory frameworks governing prediction markets and the balance of sovereignty and innovation in tribal and state jurisdictions.