- A three-judge panel ruled 3-0 that federal Indian gaming law treats Kalshi’s sports contracts as Class III gaming.
- Blue Lake Rancheria in Humboldt County and Chicken Ranch Rancheria in Tuolumne County brought the case.
- California Attorney General Rob Bonta and 26 other states backed the tribes in a joint brief.
- The case returns to a district judge who must still decide whether to actually block Kalshi.
BLUE LAKE, Calif. – A Ninth Circuit Court of Appeals panel ruled Sept. 16 that the sports-event contracts Kalshi sells are Class III gambling that likely violates federal Indian gaming law when purchased on tribal land, reversing a lower court in part and reviving Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians’ bid to keep the prediction-market company off their reservations.
What The Panel Decided
Judge M. Margaret McKeown wrote for the unanimous panel, joined by Chief Judge Mary H. Murguia and Judge Richard A. Paez, in the court’s opinion in Blue Lake Rancheria v. Kalshi, Inc., No. 25-7504. The panel found that Kalshi’s contracts, which pay out on the outcome of games such as an NFL matchup, meet federal regulators’ own definition of Class III gaming, the same category covering blackjack, slot machines and parimutuel wagering, regardless of what the company calls them.
“Kalshi may reshuffle the cards, but it cannot change the hand,” McKeown wrote. “Its sports event contracts are class III gaming.”
The panel also held the wagers are located on Indian land whenever a customer buys one while standing on a reservation, even though Kalshi runs its exchange from New York, and that the contracts violate the tribes’ own gaming ordinances under the Indian Gaming Regulatory Act (IGRA) because no compact or federal procedure authorizes an outside company, including co-defendant Robinhood, to take sports bets on their land.
Judges rejected Kalshi’s argument that a federal commodities-trading law shields the contracts from tribal enforcement. The panel separately upheld the dismissal of the tribes’ false-advertising claim over a Kalshi ad calling sports betting “Legal in all 50 States,” ruling that a company’s opinion about a law’s meaning is not the kind of factual claim the Lanham Act covers.
Two Small Reservations, A Hard-Won Authority
Blue Lake Rancheria holds about 26 acres of trust and fee land in Humboldt County. Chicken Ranch Rancheria of Me-Wuk Indians holds about 40 acres in Tuolumne County, a small fraction of the land base behind gambling in California‘s tribal casino industry.
Both tribes owe their federal authorization for Class III gaming to an earlier fight with the state: after California failed to negotiate successor compacts in good faith, the Ninth Circuit forced the impasse into a federal remedy, and the U.S. Department of the Interior issued each tribe secretarial procedures in January 2024 that function in place of a compact, according to the opinion.
Those procedures require a tribal ordinance to authorize any Class III gaming on the rancherias, the same requirement the panel found Kalshi never met.
California Sides With The Tribes
Attorney General Rob Bonta’s office joined Massachusetts and 25 other states, plus the District of Columbia, in a brief backing the tribes, part of the same case record. The California Nations Indian Gaming Association (CNIGA), also an amicus in the case, said the ruling confirms that “sports wagers do not become financial instruments simply because a company calls them ‘event contracts.'”
“No private company should be permitted to use regulatory wordplay to bypass the safeguards, agreements, and sovereign rights that govern tribal gaming,” CNIGA Chairman James Siva said in a statement. “Federal commodities law does not erase IGRA or create a backdoor for unauthorized sports gambling on tribal lands,” Siva added.
The Indian Gaming Association set up the tribal $44 billion defense fund against prediction markets in April to coordinate litigation against Kalshi and Polymarket.
Not Blocked Yet
The ruling does not itself stop Kalshi from taking sports wagers on either reservation. The panel reversed only the district court’s legal reasoning on the tribes’ IGRA claim. U.S. District Judge Jacqueline Scott Corley now takes the injunction motion up again on the three tests she never reached: whether the tribes face irreparable harm, where the equities tip and what the public interest requires. Until Corley rules, no injunction bars Kalshi’s contracts on either reservation, and the opinion does not reach California’s other prediction market sites.