Judge rejects tribes’ bid to block Kalshi’s sports events contracts
A California federal judge has denied a request by three Native American tribes to block Kalshi from offering sports-related event contracts, ruling that the crypto-style prediction market does not engage in unlawful gambling under federal law.
US District Judge Jacqueline Scott Corley rejected a request ruling that the tribes had not shown a strong chance of winning their case under the Indian Gaming Regulatory Act or the Lanham Act.
The lawsuit, filed by the Blue Lake Rancheria, Chicken Ranch Rancheria of the Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians, accused Kalshi and its partner Robinhood of running unlicensed gambling platforms that reached users on tribal lands.
Corley ruled that Kalshi’s ‘yes/no’ event contracts fall under the Commodity Exchange Act and are regulated by the Commodity Futures Trading Commission, which has exclusive jurisdiction.
“[The Indian Gaming Regulatory Act] does not address this scenario,” she wrote, noting the statute predates the internet era.
The court also rejected the tribes’ false advertising claim, holding that Kalshi’s marketing statement that sports betting is “legal in all 50 states” reflected an opinion supported by prior rulings rather than a literal falsehood.
The decision comes after Kalshi recently chose to remove references to sportsbooks from its job listings, following concerns from social media users that the use of the word “sportsbooks” conflicted with the claim that Kalshi is not part of the gambling industry.
Abi Bray brings strong researching skills to the forefront of all of her writing, whether it’s the newest slots, industry trends or the ever changing legislation across the U.S, Asia and Australia, she maintains a keen eye for detail and a passion for reporting.
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The Backstory
Why this ruling matters now
A federal judge’s refusal to block Kalshi’s sports event contracts caps months of fast-moving litigation over who gets to police the line between prediction markets and sports betting. The decision underscores a core tension: Kalshi says its yes/no contracts are commodities regulated by the Commodity Futures Trading Commission, while a growing number of state regulators and tribal governments argue the activity is functionally sports wagering that requires state licensing and controls. The outcome will shape how and where retail traders can speculate on sports outcomes, how state gaming regimes assert authority online and how tribes protect exclusivity on their lands.
How the fight spread across the map
Kalshi’s legal battles have ricocheted through key jurisdictions since summer, with state agencies testing the reach of their gaming laws against a federally regulated platform. In New Jersey, a federal judge granted Kalshi breathing room, temporarily blocking regulators from enforcing a cease-and-desist while the court weighs the state’s position that the company is running unlicensed sports betting. The ruling, described in a report on the preliminary injunction, signaled early federal court skepticism of state efforts to sideline a CFTC-regulated marketplace pending a fuller review.
At the same time, regulators in Nevada, Maryland, Ohio, Montana and Illinois moved to examine or restrict Kalshi’s operations. Nevada’s case looms as especially consequential given the state’s central role in U.S. gambling policy and its constitutional prohibition on election wagering. A federal judge there has pledged to move quickly, heightening pressure for a clear ruling on whether CFTC oversight preempts state gaming controls. Inside the state’s docket, the Nevada Gaming Control Board and the Nevada Resort Association argue Kalshi lacks the safeguards expected of licensed sportsbooks, while Kalshi maintains its contracts fall squarely under federal commodities law. Those stakes are detailed in coverage of the Nevada timetable.
Ohio’s hard line on licensing
Ohio moved aggressively to cordon off its sports betting market. The Casino Control Commission issued a cease-and-desist and warned licensed sportsbooks that partnering with Kalshi, even outside state lines, could jeopardize their permits. Kalshi answered with a federal lawsuit arguing the state is overreaching and chilling its business relationships. In the Ohio complaint, Kalshi says months of dialogue failed to bridge the gap between its federal preemption argument and Ohio’s stance that only state-licensed operators can offer sports wagers to residents. The case sits against a broader backdrop: a June brief by dozens of state attorneys general supporting the principle that states can regulate online betting activity affecting their citizens.
The Ohio clash matters beyond its borders. If a federal court backs Ohio’s approach, regulators elsewhere could adopt similar partner warnings and compliance signals that limit Kalshi’s access to distribution and liquidity. If Kalshi prevails, the decision could blunt a key state leverage point and embolden the platform to expand its sports catalog where it believes CFTC jurisdiction shields it from state enforcement.
Massachusetts resets the venue fight
Massachusetts became the first state attorney general’s office to sue Kalshi over sports markets offered to residents, and it notched an early procedural win. A federal judge rejected Kalshi’s attempt to move the case to federal court, sending it back to Suffolk County Superior Court. As outlined in the Massachusetts remand decision, the court said Kalshi’s preemption arguments may be a defense but do not convert the state’s claims into federal ones. The ruling ensures state judges will parse how Massachusetts gambling statutes apply to event contracts marketed to local customers.
That venue call is pivotal. Keeping the case in state court preserves the attorney general’s strategic terrain and could encourage other states to bring similar actions at home rather than in federal forums where CFTC oversight arguments may carry more weight. It also complicates Kalshi’s push for a uniform, federally framed resolution to the sports-contract question.
Federal courts test the boundaries
Federal judges have started to sketch the contours of where commodities law ends and state gambling authority begins. The New Jersey injunction, described in the court’s interim order, kept Kalshi live in that state and aligned with the platform’s view that strict federal supervision distinguishes its markets from traditional sportsbooks. But judges have also shown deference to state proceedings. In Massachusetts, the remand order limited the reach of “complete preemption,” a doctrine that would have pulled the state case onto a federal track.
These divergent rulings set up a patchwork reality. Kalshi can operate in some places while facing injunction threats in others. For traders, that means access may hinge on where they live and how local regulators interpret contracts tied to sports. For competitors, it raises the question of whether CFTC-regulated event markets represent an alternative channel or a regulatory loophole that undercuts licensed books.
Tribal stakes and the path ahead
The California tribes’ lawsuit put a sharper spotlight on the interplay between federal commodities oversight, state gaming compacts and tribal sovereignty. Their filing followed a surge of activity around the NFL season opener, when Kalshi reported heavy trading volumes. The tribes asked the court to require geofencing on tribal lands and to curb what they called misleading ads, including claims that event contracts are legal nationwide. Those details were laid out in reporting on the tribes’ challenge.
While the latest federal ruling held that the Indian Gaming Regulatory Act does not reach Kalshi’s federally regulated contracts, the tribes’ broader argument mirrors state regulators’ concerns: that sports-linked event markets can function like betting without the responsible gambling tools and licensing obligations imposed on sportsbooks. If appellate courts take up the question, tribal compacts and their exclusivity terms could become a central axis of the debate, especially in states where tribal operators hold primary rights to offer gaming.
The next milestones are likely in Nevada and Ohio, where the courts could deliver substantive opinions on preemption, state police powers and the operational safeguards required for event contracts. A clear win for Kalshi in a major venue could solidify the CFTC-first framework and push more activity into federally regulated markets. A strong ruling for states would reassert the primacy of gaming licenses and compliance regimes and could force prediction platforms to geofence, pare back sports offerings or seek state approvals.
For now, the litigation has forced regulators, tribes and market operators into a real-time test of jurisdiction in the internet era. As courts draw lines, the business models that survive will show whether sports event contracts belong on commodities exchanges, inside state sportsbooks or nowhere at all.
