Ninth Circuit Questions Kalshi Tribal Sports Contracts

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Tue Jul 14, 2026, 9:00 am ET

Read Time: 4 minutes

Ninth Circuit Questions Kalshi Tribal Sports Contracts

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A Ninth Circuit panel closely questioned Kalshi's legal position during oral arguments over its sports event contracts. The hearing centered on whether those contracts amount to illegal sports betting on tribal lands under the Indian Gaming Regulatory Act (IGRA).

The appeal marks another major legal challenge for the prediction market operator as regulators and tribal governments continue to scrutinize its sports contracts. Kalshi maintains its products fall under federal commodities law. However, California tribes argue they operate no differently than wagers offered by traditional sportsbooks.

The outcome could influence how courts distinguish federally regulated prediction markets from US online sportsbooks. It could also shape the future of California gambling, particularly regarding tribal exclusivity over certain gaming activities.

Ninth Circuit Panel Questions Whether Kalshi's Sports Contracts Differ from Sports Betting

During oral arguments, members of the Ninth Circuit repeatedly asked Kalshi to explain what separates its sports contracts from conventional sports betting. Judge M. Margaret McKeown and Judge Richard Paez focused on whether the contracts differ in any meaningful way from wagers placed through traditional sportsbooks.

The judges questioned whether federal regulation alone changes the practical nature of the transactions. They also examined whether consumers experience Kalshi's products differently than bets offered by licensed sportsbooks.

Kalshi argued that its event contracts trade on a federally regulated exchange rather than through a gambling operator. Even so, the panel repeatedly returned to the same question: If customers simply predict the outcome of sporting events, what makes those contracts fundamentally different from sports betting?

While the judges didn't reveal their ruling, their questions show careful evaluation of Kalshi's legal framework and real-world operations.

California Tribes Argue Kalshi's Contracts Function as Sports Betting

California tribes contend that Kalshi's sports contracts function exactly like sports bets from a consumer's perspective. They argue users risk money on sporting outcomes and receive payouts based on the results.

The tribes also argue that IGRA applies whenever users access Kalshi's platform while located on tribal lands. Under the statute, federally recognized tribes hold exclusive rights to conduct Class III gaming on their reservations through approved gaming compacts.

According to the appeal, Kalshi bypasses those protections by offering sports contracts without entering tribal agreements. The tribes further argue that the district court placed too much weight on Kalshi's registration with the Commodity Futures Trading Commission (CFTC). Instead, they say the court should have focused on how the products actually operate.

Attorney Lester Marston, who represents Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria, emphasized that location changes the legal analysis.

"The moment they come onto the reservation, Kalshi is violating federal law and the civil provisions of the Indian Gaming Regulatory Act," Marston argued.

Marston relied on Supreme Court precedent recognizing that conduct lawful outside tribal lands can become unlawful once it occurs on a reservation.

Kalshi Says Federal Commodities Law Governs Its Marketplace

Kalshi maintains that its sports contracts are federally regulated event contracts listed on a CFTC-licensed exchange. The company argues these products are financial derivatives rather than gambling products.

Because federal commodities law governs its exchange, Kalshi contends IGRA does not apply to its marketplace. The company also argues that CFTC oversight distinguishes its contracts from wagers accepted by traditional sportsbooks.

From Kalshi's perspective, the exchange lists regulated financial instruments instead of gambling products. Therefore, it believes federal law preempts attempts to classify those contracts as tribal gaming.

That distinction has become central to multiple legal disputes involving the company across the United States.

Appeal Could Shape Future Cases Involving Prediction Markets

The Ninth Circuit appeal addresses a different legal question than other ongoing cases involving Kalshi.

Here, the court must determine whether the company's sports contracts constitute Class III gaming under IGRA when users access them on tribal lands. That issue directly affects tribal sovereignty and gaming exclusivity in California gambling.

Meanwhile, the Sixth Circuit is scheduled to hear consolidated appeals involving Ohio and Tennessee later this month. Those cases will focus on whether the Commodity Exchange Act preempts state gambling laws rather than tribal gaming statutes.

As a result, Kalshi could prevail before one appellate court while losing before another. Each case turns on different statutes and legal theories, even though they involve the same sports event contracts.

The Ninth Circuit's eventual ruling could become an important precedent for prediction markets operating alongside US online sportsbooks. 

It may also clarify how federal commodities law interacts with IGRA when sports contracts become accessible on tribal lands.

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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