A federal appeals court is considering whether two companies, Kalshi Inc. and Robinhood Markets, can continue to offer sports event contracts to people living on tribal lands. The issue is at the center of a lawsuit filed by three California tribes.
The appeal stems from a lower court decision that denied a preliminary injunction requested by the tribes. The tribes, Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria, argue that the contracts offered by Kalshi and Robinhood constitute Class III gaming under the Indian Gaming Regulatory Act.
An attorney representing the tribes argued that the contracts become Class III gaming whenever someone enters into one from tribal land. He used an example of a user downloading the Kalshi app and placing money on a sports contract whose payout would depend on the outcome of a game.
A judge on the panel noted that there appears to be little practical difference between Kalshi's product and a traditional sportsbook. The judge pointed out that Kalshi's counsel had acknowledged that the same transaction would be barred through another company but allowed through Kalshi.
The attorney for the tribes argued that the legal status of the contracts changes once the activity occurs on tribal land. He claimed that Kalshi is violating federal law and the civil provisions of the Indian Gaming Regulatory Act.
The attorney also argued that tribal gaming ordinances, tribal-state compacts, and the Indian Gaming Regulatory Act work together as a single regulatory system. He relied on Supreme Court precedent recognizing that conduct lawful elsewhere can become unlawful on a reservation.
Kalshi's attorney urged the panel to decide the appeal on narrower grounds. He argued that the tribes cannot sue under the provision they cited because it authorizes claims only for gaming conducted in violation of a tribal-state compact.
The attorney for Robinhood focused on the injunction standard rather than the statutory dispute. He argued that the tribes failed to demonstrate irreparable harm or customer diversion.
The panel took the case under submission without issuing a ruling. The judges repeatedly questioned how Kalshi's contracts differ in practice from sportsbook wagers.
