- Details
- By Brian Edwards
- Gaming
Three California tribes have filed a federal lawsuit against prediction market companies Kalshi and Robinhood, alleging the firms are conducting illegal sports gambling on tribal lands in violation of federal gaming laws.
Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of Chukchansi Indians filed the complaint Tuesday in U.S. District Court for the Northern District of California. The tribes argue that Kalshi’s sports event contracts constitute Class III gaming under the Indian Gaming Regulatory Act and violate their exclusive right to regulate gaming on reservation lands.
“Kalshi will claim that it is not offering sports gambling. Kalshi will tell the Court that it is a Designated Contract Market, regulated exclusively by the Commodities Futures Trading Commission and is merely operating a 'prediction market' that permits the buying and selling of 'commodities contracts,' or swaps on sporting events,” the complaint states. “While masquerading as novel commodities and futures products, these event contracts are, substantively, nothing more than illegal, unregulated wagers on the outcomes of sporting events.”
The lawsuit centers on Kalshi’s “event contracts” that allow users to bet on sports outcomes, including major championships like the Super Bowl and March Madness tournaments. Robinhood has offered these contracts to its 25 million users through a dedicated “prediction markets hub” since March, giving Kalshi a nationwide reach, according to the court filing.
The tribes contend these contracts violate federal regulations that explicitly prohibit designated contract markets from listing contracts that involve “gaming.”
California prohibits sports betting, and the three tribal governments operate casinos under gaming compacts with the state that do not authorize sports wagering. The tribes claim that Kalshi’s contracts undermine their regulated gaming operations and interfere with their sovereign authority on tribal lands held in trust by the federal government.
The lawsuit also challenges Kalshi’s marketing claims that its platform offers “Sports Betting Legal in all 50 States” and describes itself as “The First Nationwide Legal Sports Betting Platform.” Several states — including Nevada, New Jersey and Maryland — have issued cease-and-desist orders against Kalshi’s sports contracts.
According to the complaint, Kalshi has promoted its sports contracts as “betting” through widespread advertising campaigns on Instagram, TikTok, YouTube and other social media platforms, even as online users expressed concerns about their legality and the company defended them as non-gambling commodity derivatives regulated by the Commodities Futures Trading Commission (CFTC).
The tribes seek injunctive relief to stop the companies from offering sports contracts on tribal lands, along with monetary damages under federal racketeering and false advertising laws. They argue the contracts constitute wire fraud, illegal gambling operations and unlawful transmission of wagering information.
The lawsuit comes amid uncertainty at the CFTC, where President Trump's nominee for chairman, Brian Quintenz, a Kalshi board member, has seen his confirmation stalled in the Senate Agriculture Committee. The complaint notes Quintenz previously argued that CFTC regulations prohibiting gaming contracts may be unconstitutional.
