Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioCalifornia tribes have asked a federal court to issue a preliminary injunction against Kalshi, blocking sports prediction markets on Indian lands.
The request comes after the tribes filed a lawsuit against Kalshi in July and presents the case for federal action under the Indian Gaming Regulatory Act (IGRA). The three tribes requesting action are the Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of Chukchansi Indians.
A court hearing has been scheduled for October 8, at which time the tribes will put forward an oral argument on why the injunction is necessary.
If granted, it may force Kalshi to geoblock users from tribal lands, but the precedent set would be more concerning, as it could lead to countless other tribes filing the same request. Additionally, states where sports betting is not legal could also have a stronger case to petition for the platform to be blocked.
Kalshi’s Sports Contracts ‘Unequivocally Do Not Comply with IGRA’
In the court filing, posted on X by Daniel Wallach, the three tribes restate the argument that Kalshi is offering illegal sports betting in all 50 states. But, as the IGRA is federal law, there is a stronger chance of success in blocking the platform on tribal lands.
Kalshi has argued that because it is regulated by the Commodity Futures Trading Commission (CFTC) and federal law through the Commodity Exchange Act (CEA), it is not subject to state gambling laws.
The CEA, however, would not preempt the IGRA. The filing says that “states, under federal oversight, have the exclusive right to regulate gaming on Indian lands.”
It goes on to say: “Kalshi’s contracts unequivocally do not comply with IGRA. Thus, even if the Court were to determine that Kalshi’s self-certifications comply with the CEA, Kalshi’s activity would still constitute class III gaming activity located on Indian lands conducted in violation of IGRA.”
Tribes: Kalshi Encourages Addictive Behavior
The tribes, which all run casinos on their lands, also argue that Kalshi is promoting addictive behavior. The document states: “Kalshi’s app-based platform combines one of the most addictive activities, sports betting, with one of the most addictive devices, smart phones, without any preventative measures for compulsive behavior or remedial treatment for addiction.”
While the tribes may have a legitimate argument that Kalshi is offering users the chance to gamble on sports, it is counterintuitive for them to argue that Kalshi’s markets are more addictive than casino games.
US bettors lost around $13.71 billion wagering on sports last year, but around triple that, $49.71 billion, was lost at casinos. Slots, in particular, are highly addictive due to the combination of a fast pace, near misses, lights, sounds, and continuous availability.
Kalshi has been expanding its range of markets, but is still limited to pre-event contracts as opposed to in-play micro bets, which have been likened to slots due to their availability and fast pace.
Kalshi Suffers Legal Setbacks
The case has the potential to complicate things for Kalshi, as the platform has suffered setbacks in court. A judge in Maryland refused to grant the company an injunction after the state issued it a cease-and-desist letter. It has appealed the decision and can continue operating for now.
Last week, a judge in Nevada also denied Kalshi’s motion against discovery. As a result, the company will be required to divulge additional information about its operations in a more extensive legal process.
Cases in Maryland, Nevada, and New Jersey are still far from any definitive rulings, but the case in California asks for the process to be expedited. An unfavorable ruling in one court could have a reverberating effect, disrupting the smooth passage of prediction markets expanding into sports.
