The Ninth Circuit Court of Appeals held a hearing on Friday regarding a lawsuit filed by three California tribes against Kalshi. The panel is examining whether the company’s sports-event contracts violate federal gaming regulations on tribal lands.
Comparison to Traditional Wagers
During the proceedings, the appeals panel pressed Kalshi to distinguish its products from conventional sports betting. Judge M. Margaret McKeown asked attorney Grant Mainland to compare a Kalshi contract tied to a San Francisco Giants victory with a standard wager placed through DraftKings.
Mainland acknowledged that trading on game outcomes "has some similarity" to sportsbook betting, though he noted the markets are regulated differently.
The tribes, represented by attorney Lester Marston, argue that Kalshi’s contracts amount to unauthorized Class III gaming under the Indian Gaming Regulatory Act. Marston cited United States v. Mazurie to assert that wagering on sporting contests falls within the Act’s scope.
He further relied on Michigan v. Bay Mills Indian Community to emphasize that the legal location is where the patron places the bet, rather than where the servers are hosted.
A secondary focus of the hearing was whether the tribes possess standing to sue under the Act. Kalshi contends that the Commodity Futures Trading Commission holds exclusive jurisdiction, whereas the tribes argue for an integrated regulatory framework. The court has not set a deadline for the decision and may affirm the previous denial of a preliminary injunction, reverse it, or rule specifically on the standing issue.
The appeal seeks to revive a request for a preliminary injunction that a federal judge denied last year. The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians initiated the legal action to protect tribal sovereignty.