Ninth Circuit Presses Kalshi as California Tribes Appeal Injunction Denial

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit heard oral arguments in mid-July 2026 in a closely watched dispute over whether prediction-market sports contracts may be offered to customers on tribal land in California — and, by several accounts, the judges were skeptical of the platforms' core defense. The case pits three California tribes against Kalshi, the federally regulated event-contract exchange, over markets that let users take positions on the outcomes of sporting events.

The Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians and the Picayune Rancheria of the Chukchansi Indians are appealing a November 2025 order by U.S. District Judge Jacqueline Scott Corley, who declined to issue a preliminary injunction blocking the contracts. The tribes argue that Kalshi's sports markets are functionally unauthorized Class III sports betting on their reservations, conducted outside the tribal-state compact framework that the Indian Gaming Regulatory Act requires. This is one of several fronts in a widening national fight; our mid-2026 prediction-markets litigation scorecard tracks the parallel cases.

"Sounds like a bet"

At the heart of the appeal is a definitional question with large practical stakes. Kalshi contends its sports markets are financial derivatives regulated exclusively by the Commodity Futures Trading Commission, and that federal commodities law preempts state and tribal gaming regulation. The tribes counter that a contract paying out based on which team wins is, in substance, a wager — and that offering it to someone standing on a reservation intrudes on gaming activity IGRA reserves to compacted operators.

According to reports from the hearing, the panel pressed Kalshi hard on the distinction, with one judge remarking that the contracts "sound like a bet" subject to gaming law. The judges appeared at least open to preliminarily restraining the platforms while the underlying case proceeds, though questions at argument are not a ruling, and the court gave no timetable for a decision.

The tribes' argument is not that prediction markets are illegal everywhere — it is that offering event contracts to users on Indian lands treads on gaming activity IGRA channels through tribal-state compacts.

Why the district court said no

Judge Corley's earlier denial turned on the specific wording of the tribes' gaming instruments. In her reading, the compact governing Picayune and the federal procedures covering Blue Lake and Chicken Ranch described what the tribes themselves could operate but did not squarely address what an outside company could offer to customers who happened to be on tribal land. That gap, she concluded, made the tribes' likelihood of success on the merits too uncertain to justify the extraordinary remedy of a preliminary injunction.

The Ninth Circuit is now weighing whether that reasoning holds. A reversal would not decide the case outright, but it would restore an injunction and send a strong signal about how the appellate court views the collision between commodities regulation and tribal gaming sovereignty. Readers can find profiles of the operators and compacts in play through our California tribal gaming hub.

Stakes beyond California

The appeal is being watched well outside the state because the same legal theory is being litigated by tribes and regulators across the country, including a separate suit by New Mexico tribes seeking to shut the contracts down. That case, which we covered when New Mexico tribes sued Kalshi over IGRA, rests on a similar premise that event contracts encroach on exclusive tribal gaming rights.

For tribal operators, the concern is concrete. Many negotiated exclusivity — often in exchange for substantial revenue-sharing payments to states — on the understanding that sports wagering on their lands would run through their books. A ruling that federally regulated event contracts can reach reservation customers regardless of a compact would, in the tribes' view, hollow out that bargain. The Legal Guide explains why exclusivity and the compact structure are so central to the economics of Indian gaming.

The procedural posture is worth keeping in mind as commentary about the hearing circulates. The three tribes are not asking the Ninth Circuit to resolve the ultimate legality of prediction-market sports contracts; they are asking it to reinstate a preliminary injunction that would freeze the contracts on their lands while the case is litigated in full. A win at this stage would change the status quo and the leverage between the parties, but it would still leave the merits — including the thorny preemption question — for another day, potentially back before Judge Corley or, eventually, the Supreme Court.

Kalshi, for its part, has consistently framed the fight as one about federal authority over regulated markets, arguing that a patchwork of state and tribal gaming rules cannot be allowed to carve up a nationally regulated exchange. That position has found some traction in other venues, which is part of why the tribes' appeal drew such close attention: the Ninth Circuit's eventual answer will land in a body of law that is still very much taking shape.

However the panel rules, the argument crystallized the question courts and Congress will ultimately have to answer: whether a product marketed as a financial instrument can also be a bet when it lands on tribal land — and who gets to decide.