Ninth Circuit Sides With California Tribes Against Kalshi

In a landmark decision for tribal gaming sovereignty, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled unanimously on September 16, 2026, that prediction market operator Kalshi Inc. is likely offering unauthorized Class III gaming under the Indian Gaming Regulatory Act (IGRA) when users purchase sports event contracts on tribal reservations. Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians sued Kalshi and Robinhood under the Indian Gaming Regulatory Act, or IGRA, and the court reversed a district judge who had refused them a preliminary injunction in California.

“Kalshi may reshuffle the cards, but it cannot change the hand: Its sports event contracts are class III gaming,” wrote Judge M. Margaret McKeown, joined by Chief Judge Mary H. Murguia and Judge Richard A. Paez.

The win isn’t a ban yet. The panel sent the case back to Judge Jacqueline Scott Corley in the Northern District of California to weigh the remaining tests for an injunction, so Kalshi can keep offering the contracts on both reservations until she rules.

The $100 Giants Bet Test

McKeown built the opinion around one scene. “Imagine a user standing on the floor of the Blue Lake Casino Hotel who downloads Kalshi and DraftKings, a classic online sports betting app,” she wrote. On Kalshi, the user buys a $100 contract that pays if the San Francisco Giants win, and on DraftKings she bets $100 on the same result. “The bettor, the place, the stake, and the contingency remain the same. The only thing that changes is Kalshi’s vocabulary.”

The court said IGRA asks what an activity looks like, not what an operator calls it. It also pointed back to its own Nevada ruling of August 28, repeating that “the substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps.” The opinion notes that trading data suggests up to 90 percent of Kalshi’s volume comes from sports, which is why this is not a side issue for the company.

Where a Phone Bet Actually Happens

Corley had denied the injunction partly because she found the transactions didn’t take place on tribal land. The panel disagreed. “Kalshi may be headquartered in New York, and its back-end infrastructure may sit off Indian lands, but a Kalshi consumer can still enter an event contract on Indian lands if she purchases one while on a reservation,” McKeown wrote.

That matters because both rancherias are small. Blue Lake covers about 26 acres in Humboldt County and Chicken Ranch about 40 acres in Tuolumne County, and a phone on either patch of ground is now, in the court’s view, a place where gaming happens.

Kalshi’s Federal Shields Didn’t Hold

Kalshi argued two other federal laws protected it. The first was the Unlawful Internet Gambling Enforcement Act, which carves out trades on CFTC-registered exchanges. The panel said that law governs payments tied to illegal online gambling, and doesn’t displace IGRA’s right for tribes to stop unauthorized class III gaming on their land.

The second was the Commodity Exchange Act’s grant of “exclusive” jurisdiction to the CFTC over designated contract markets. The court said the two laws answer different questions. “The former statute may determine when a contract can trade on a DCM,” McKeown wrote. “It does not determine whether the same transaction, when offered to users on Indian lands, satisfies IGRA’s separate requirements.”

The One Point Kalshi Won

Kalshi did win on false advertising. The tribes had also sued under the Lanham Act over an ad saying “Sports Betting [Is] Legal in all 50 States on Kalshi.” The panel agreed with Corley that a lay opinion about legality can’t support that claim.

Robinhood is in the case as the retail distributor for Kalshi’s products. A third tribe, Picayune Rancheria of the Chukchansi Indians, was dismissed from the appeal after oral argument under a joint stipulation.

A Second Ninth Circuit Loss in Three Weeks

The tribal ruling comes 19 days after the same court’s Nevada decision in KalshiEX v. Assad, the case at the heart of Nevada’s long fight with prediction markets. Kalshi has asked the full Ninth Circuit to rehear that one en banc, and Robinhood has gone to the Supreme Court. Its petition was filed on September 10 and docketed on September 14, with Nevada’s response due October 14.

Under the federal appellate rules, a panel’s mandate doesn’t issue until a timely rehearing petition is resolved, and at least one constitutional law professor has said the request puts the Nevada decision on hold, leaving most states in the circuit unable to act on it for now. The Third Circuit went the other way in April, holding that federal law preempts gambling rules in New Jersey, and New Jersey’s petition asking the justices to settle the split was docketed on September 8.

The Tribes Want Geofencing

Lester Marston, the lawyer for both tribes, didn’t soften it. “Kalshi is a $44 billion company. For a couple of million, they could have geofenced around the tribes’ reservations,” he told Courthouse News. Kalshi attorney Joshua Sterling declined to comment.

For tribes that built their casinos under state compacts, the principle is bigger than two rancherias. David Z. Bean, chairman of the Indian Gaming Association, called the decision “an important victory for tribal sovereignty” and put the tribes’ case in one line: “Tribal sovereignty does not stop at the edge of a screen.”

Until Corley rules, the contracts stay live on both reservations, even though an appeals court has already called them likely illegal there.