Federal Judge Rules Kalshi Sports Contracts Can Continue Despite Tribal Lawsuit
A federal judge denied a request for a preliminary injunction against Kalshi, allowing the event contract platform to continue its sports-related operations during an ongoing lawsuit. Judge Jacqueline Scott Corley of the U.S. District Court for the Northern District of California issued the ruling.
The injunction was sought by three federally recognized California tribes: Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians. The court found the tribes failed to demonstrate a likelihood of success on the merits for any of their claims.
The Regulatory System of Event Contracts
The ruling centers on the critical distinction between traditional gambling and the federally regulated financial products offered by Kalshi. The tribes argued that Kalshi’s binary “yes/no” contracts on sports outcomes constituted illegal Class III gaming under the Indian Gaming Regulatory Act (IGRA) on tribal lands.
Judge Corley dismissed the IGRA claim because Kalshi’s event contracts fall under the Commodity Exchange Act (CEA). This means they are regulated by the federal Commodity Futures Trading Commission (CFTC).
Critically, the Unlawful Internet Gambling Enforcement Act (UIGEA) excludes transactions conducted on a registered exchange under the CEA from its definition of a “bet or wager.” Because Kalshi is a registered exchange, its internet contracts are not considered unlawful internet gambling, even if accessed from tribal lands.
The court explicitly stated it lacked the jurisdiction to rule on whether Kalshi’s contracts violated the CEA; that oversight power belongs exclusively to the CFTC.
Lanham Act Claim and Business Strategy
The tribes also sought to bar Kalshi from advertising its sports contracts as “Legal in all 50 states” under the Lanham Act, which governs false advertising. The court denied this claim as well, finding that Kalshi’s statement was merely an “expression of opinion.”
The ruling noted that since other courts have agreed with Kalshi’s legal interpretation of its product, the tribes failed to show the advertisement was literally false under the Lanham Act standard.
Though the injunction was rejected, the broader lawsuit against Kalshi, and its exchange partners Robinhood Derivatives and Robinhood Markets, continues in the Northern District of California.
Judge Corley acknowledged the gravity of the tribes’ concerns about financial impact and tribal sovereignty. She noted that Kalshi may have “found a way around prohibitions on interstate gambling” through its self-certification process under the CEA, but this concern did not override the statutory limits on the court’s jurisdiction.
The outcome allows Kalshi to continue operating its prediction market, reinforcing the argument that its event contracts are federally regulated financial instruments rather than a form of sports betting. The tribes have confirmed their intent to continue the legal action.
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