California tribes are pursuing an injunction against prediiction market platform Kalshi in federal court
If successful, the injunction would prohibit Kalshi offering prediction markets on tribal land
Kalshi would be required to geofence its signal around all tribal land in the state
A trio of California tribes has
filed a lawsuit
against prediction market platform Kalshi. If successful, it could prove to be a game-changing maneuver in the battle to halt the rapid expansion of prediction markets in the US.
The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians are seeking a preliminary injunction against Kalshi Inc. and KalshiEX LLC, (collectively, Kalshi). This suit has been filed in United States District Court for the Northern District of California.
The suit alleges that Kalshi is offering illegal sports gambling. Lawyers for the California tribes are asking that the court enjoin Kalshi from offering any sports contracts on tribal lands. These would include, but not be limited to, contracts that facially involve, relate to, or reference the sports of baseball, tennis, pickleball, soccer, basketball, football, golf, chess, esports, hockey, motorsports, the Ultimate Fighting Championship (“UFC”), and any other sports events.
The suit further requests that the Court enjoin Kalshi from offering any yes/no event contracts. These are contracts that ask two specific questions: Will a team win a title? Will a team win an event?
California's tribes control all legal and regulated casino gambling in the state. There is only land-based casino gambling in the state. Online casino gambling and all forms of sports betting are illegal in California.
It would be necessary for Kalshi to geofence California tribal lands
If the California tribes are successful in gaining this temporary injunction, a requirement would be that Kalshi be instituting geofencing technology preventing access to its prediction market platform around all tribal land in the Golden State. This would prevent access to the site by anyone on tribal land.
Lawyers for the tribes argue that the Indian Gaming Regulatory Act (IGRA) guarantees control of all gambling activity taking place on tribal lands to the tribes.
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This suit could ultimately have national consequences
A hearing on this motion will be taking place on October 9th at 10 AM PST. Hearing the case will be U.S. District Judge Jacqueline Scott Corley in the San Francisco federal courthouse.
Prediction market platforms such as Kalshi are operating under a federal license from the Commodities Futures Trading Commission (CFTC). These sites have utilized this fact as a loophole to offer prediction markets. These are event outcome contracts on everything from sports to politics, entertainment, current events, and pop culture.
It's also enabling prediction market sites to offer sports event contracts in states in which approval of the legalization of sports betting hasn't taken place. Legal sports betting sites in the US are all regulated by state gaming commissions. In court, lawyers representing the prediction market sites argue that federal law supersedes any state law.
That's why this suit, if successful, could change the playing field. The tribes are asserting that this is a violation of federal law (IGRA). Lawyers representing the tribes are arguing that the compact these tribes have with the federal government prohibits sports gambling on the Tribes’ reservations or “Indian Lands”, as defined by the IGRA.
Past legal cases against prediction market sites have been tried at the state level. The argument that has proven to be mostly successful for prediction market lawyers in past cases - that federal law supersedes state law - isn't going to apply here.
If the California tribes win the temporary injunction, it will create an opportunity. Tribes in other states are likely to seek similar legal action, using this case as precedent.
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The suit alleges that Kalshi is offering illegal sports gambling. Lawyers for the California tribes are asking that the court enjoin Kalshi from offering any sports contracts on tribal lands. These would include, but not be limited to, contracts that facially involve, relate to, or reference the sports of baseball, tennis, pickleball, soccer, basketball, football, golf, chess, esports, hockey, motorsports, the Ultimate Fighting Championship (“UFC”), and any other sports events.
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