Ninth Circuit rules in favor of Blue Lake Rancheria Tribe against Kalshi

The US Court of Appeals for the Ninth Circuit has handed yet another defeat to Kalshi after ruling in favor of the Blue Lake Rancheria Tribe, determining sports event contracts are class III gaming under the Indian Gaming Regulatory Act (IGRA) and not protected by the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). 

Despite the Tribe’s previous motion for a preliminary injunction being denied by a District Court in California, Blue Lake Rancheria will now be able to cite the Ninth Circuit’s decision in additional enforcement action against the operator. 

Robinhood was also named within the legal filing on September 16, although the operator could choose to pull sports event contracts out of California in a similar fashion to when Kalshi’s legal proceedings in Michigan favored state regulators as well. 

The Ninth Circuit Court has been a thorn in Kalshi’s growth recently, having also denied the operator’s attempt to file enforcement action against Nevada regulators during August. 

As part of a unanimous 3-0 decision, the court determined that the Commodity Exchange Act (CEA) is unlikely to pre-empt regulations enforced by the Nevada Gaming Commission as applied to sports event contracts. 

The ruling easily represented the most notable victory over prediction markets to date for state regulators, as jurisdictions such as Michigan and New Jersey immediately referenced the decision in ongoing legal matters. 

American Gaming Association (AGA) President & CEO Bill Miller applauded the decision at the time of announcement, having said, “The Ninth Circuit’s unanimous decision confirmed state and voter choice about sports betting in their communities. 

“The AGA applauds Nevada’s leadership for protecting and preserving the state- and Tribal-regulated gaming framework. This ruling is a significant win for consumer protections and taxpayers. It is a big loss for Kalshi and other backdoor sports gambling operations who defy state law.”

Following the most recent Ninth Circuit decision, it would not be surprising to see Blue Lake Rancheria file a second preliminary injunction against Kalshi, seeking to pull the operator’s contract trading business out of California.