California Tribes Secure Preliminary Injunction Against Kalshi

California tribes win a significant victory

In a case heard in the Northern District of California, it was U.S. District Judge Jacqueline Scott Corley who granted the preliminary injunction to the tribes. Her ruling prevents Kalshi from offering sports-event contracts on the plaintiffs' tribal lands. Lawyers representing the tribes were able to turn their September appellate victory into an order restricting sports-event contracts on their lands.

“Kalshi Inc. and KalshiEX are enjoined from offering on the Tribes’ Indian lands any sports contracts,” the injunction states, including contracts that “facially involve, relate to, or reference” baseball, tennis, pickleball, soccer, basketball, football, golf, chess, esports, hockey, motorsports, boxing, wrestling and UFC events. This is according to reporting by DeFi Rate.

The judge is requiring that the plaintiffs provide Kalshi with boundary maps of their tribal lands by November 13. The restriction geographically targets tribal lands. It is not a complete ban on Kalshi throughout California. The ruling also only offers preliminary relief. It is not a final judgment bringing the lawsuit to an end.

A September appellate court ruling set the stage for this injunction

Originally, Judge Corley denied the request of the two California tribes to be granted a preliminary injunction against Kalshi. The two California tribes - Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians - challenged that ruling on appeal in front of the Ninth Circuit Court. Prominent gambling attorney Daniel Wallach outlined the merits of the case on his social media account.

Lawyers representing the tribes argued that sports-event contracts offered on their lands under the Indian Gaming Regulatory Act (IGRA). The appellate panel ruling was unanimous in favor of the tribes. The appellate panel held that the tribes were likely to succeed on their claim that the sports-event contracts constituted unauthorized Class III gaming.

They sent the case back to Judge Corley's courtroom to consider the remaining injunction factors.

CFTC regulations cannot overturn this California ruling

A key element of this preliminary injunction won by California's tribal leaders is that all tribal gambling is federally regulated. This is not the traditional state vs. federal regulatory battle taking place in most U.S. courtrooms involving legal action against prediction market sites.

In those cases, prediction market sites such as Kalshi are putting forth the argument that they are already under federal regulatory control of the Commodity Futures Trading Commission (CFTC). Thus, they are making the case that federal regulatory powers supersede any state law.

In this instance, it's federal law vs. federal law, so the traditional battleground isn't going to work. IGRA is governing Tribal gambling. This statute recognizes the rights of federally recognized tribes to run gaming enterprises. Its creation was a way of promoting economic development, self-sufficiency, and strong tribal governments.

The creation of the National Indian Gaming Commission (NIGC) provided an independent federal regulatory agency to oversee and enforce compliance for tribal gaming. It grants tribes complete authority over all gambling taking place on tribal lands.