Ninth Circuit Grills Kalshi Over Tribal Lands IGRA Sports Betting Classification

A three-judge panel of the United States Court of Appeals for the Ninth Circuit spent much of its July 11, 2026 oral argument pressing Kalshi's attorneys to explain why the company's sports-based event contracts should not be treated as conventional sports wagers under federal Indian gaming law. The hearing centered on an appeal by three California tribes, Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of the Chukchansi Indians, seeking to revive a request for a preliminary injunction that a federal district court denied in November 2025. The panel did not rule from the bench and gave no timeline for a decision.

What the Tribes Are Arguing

The three tribes argue that Kalshi's sports-event contracts constitute unauthorized Class III gaming on tribal lands, in violation of the Indian Gaming Regulatory Act (IGRA). Class III gaming includes sports betting under IGRA's statutory definitions. Under IGRA, Class III gaming on tribal land can only be offered pursuant to a valid tribal-state compact and tribal ordinance. The tribes contend that Kalshi, a CFTC-regulated prediction market exchange, is allowing users on their reservations to place what amount to sports wagers without the authorization that IGRA would require of any entity offering equivalent products.

Tribal attorney Lester Marston argued before the Ninth Circuit panel that the location of the patron placing the bet determines where the gaming occurs under IGRA, citing the Supreme Court's decision in Michigan v. Bay Mills Indian Community. "What you do is you look to where the patron is placing the bet. It is where every roll of the dice and spin of the wheel takes place," Marston said.

What Kalshi Is Arguing

Kalshi attorney Grant Mainland argued that the company is not a party to any tribal gaming compact or ordinance and that IGRA cannot be used to sue a third-party entity that is not listed in those agreements. "Not once has IGRA been used to sue a third party like us," Mainland said, describing this as unprecedented. Mainland argued the provisions in tribal compacts govern what tribes may offer, not what an independent, federally licensed exchange may make available online to users across the country.

Kalshi's central legal position is that its sports-event contracts are financial derivatives regulated exclusively by the CFTC under the Commodity Exchange Act, not sports wagers subject to state or tribal gaming law. Mainland acknowledged to the panel that trading on whether a team wins a game "has some similarity to doing the same thing on DraftKings," but maintained the regulatory and legal framework is fundamentally different. He also warned that accepting the tribes' position would create what he called "a 240 tribe exception" to the CFTC's exclusive jurisdiction over designated contract markets.

"If it walks like a duck, it quacks like a duck," said Judge Richard Paez, offering a hypothetical where a user on tribal land downloads the Kalshi app and bets on a World Cup match. "I decide I want to bet on it. I put some money up on their app, and whether I am paid money is going to be determined by the outcome of a physical contest, a game."

The Legal Landscape Surrounding the Case

This case is analytically distinct from the state-court battles over prediction markets that have dominated news coverage. It turns on IGRA rather than the Commodity Exchange Act preemption arguments central to the Sixth and Fourth Circuit cases. The appeal has drawn an amicus brief from 27 states and Washington DC supporting the tribes, arguing that Kalshi's position would allow a CFTC-registered exchange to bypass tribal authority by placing sports wagers inside federally regulated contracts. The Wisconsin district court previously ruled that the Ho-Chunk Nation was likely to succeed on a similar IGRA claim against Kalshi, a direct conflict with the California district court ruling that the Ninth Circuit is now reviewing.

The district court judge who originally denied the injunction, Jacqueline Scott Corley, found that UIGEA (not IGRA) governed the online transactions because Kalshi qualifies for a UIGEA exclusion as a CFTC-registered entity. If the Ninth Circuit reverses, it would send the injunction question back to Corley for reconsideration. A final decision in this case could determine whether Kalshi's federal exchange status protects it from tribal governments invoking federal Indian gaming law, a question the Supreme Court may ultimately need to resolve.

Frequently Asked Questions

What is the Ninth Circuit Kalshi tribal lands case about?

Three California tribes argue that Kalshi's sports event contracts constitute unauthorized Class III gaming under IGRA (Indian Gaming Regulatory Act) when offered to users on tribal lands. Kalshi argues it is a CFTC-regulated financial exchange outside IGRA's scope. The Ninth Circuit held oral arguments on July 11, 2026 on the tribes' appeal of an injunction denial.

What is Class III gaming under IGRA?

Class III gaming under IGRA includes casino-style games and sports betting. It can only be offered on tribal land pursuant to a valid tribal-state compact and tribal ordinance approved by the Department of the Interior.

How many states support the California tribes?

Twenty-seven states and Washington DC filed an amicus brief supporting the California tribes' position before the Ninth Circuit.