Kalshi has suffered another significant court setback after the Ninth Circuit Court of Appeals found that its sports event contracts are likely being offered in violation of federal law on tribal lands.
The September 16, 2026 decision came less than a month after a separate appeals ruling went against the prediction markets platform.
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What the Court Decided
In a unanimous 3-0 decision, a three-judge Ninth Circuit panel in San Francisco backed two federally recognized California tribes: the Blue Lake Rancheria and the Chicken Ranch Rancheria of Me-Wuk Indians.
The judges determined that the tribes are likely to prevail on their argument that offering Kalshi sports even contracts on their lands without tribal approval violates the Indian Gaming Regulatory Act (IGRA). The appeals court also found that the contracts conflict with the tribes` gaming ordinances.
As part of its decision, the panel held that the tribes are entitled to a preliminary injunction, which partially reverses an earlier district court ruling that had declined to grant one.
The Reasoning Behind the Ruling
Judge M. Margarte McKeown, writing for the panel, focused on what the contracts do rather than how Kalshi describes them. The court concluded that the substance of the sports event contracts constitutes sports gambling regardless of the terminology used by the company.
The judges also addressed where a wager legally takes place. According to the ruling, when a customer enters into one of the contracts while physically located on tribal land, the wager takes place on that land. The location of Kalshi`s headquarters and the infrastructure used to process the transaction does not change that conclusion.
Kalshi then argued that the federal Unlawful Internet Gambling Enforcement Act displaced IGRA in this context. The panel rejected that position, concluding that the law does not apply to event contracts.
The Ripple Effect
The tribal dispute represents Kalshi`s second major Ninth Circuit setback in less than a month. On August 28, the court issued another decision that subjected the company`s sports-related contracts to oversight by Nevada gaming regulators.
The implications of the tribal case could also reach beyond Kalshi, with other
sports prediction markets
also being affected. Robinhood intervened in the proceedings and argued that a ruling in the tribes` favor could result in substantial business losses since it also facilitates similar sports-related contracts.
Support for the tribes extended to a bipartisan coalition of 27 states and Washington D.C., which filed the case on their behalf.
Reactions from gaming-law specialists highlighted the potential importance of the decision. Tribal gaming attorney Scott Crowell described the ruling as “very significant” while gaming attorney Daniel Wallach said the decision provides a roadmap that other tribes around the country could use when pursuing similar legal challenges.
What Happens Next
The legal dispute is far from over. A Kalshi spokesperson said the company could appeal the ruling and maintained that it conflicts with federal law around derivatives markets. Kalshi`s position is that trades executed on federally regulated exchanges fall exclusively under the oversight of the Commodity Futures Trading Commission.
In the meantime, the ruling creates another legal obstacle for Kalshi`s sports event contracts. Tribal lands now join Nevada and several other states where the products are facing direct challenges.
The wider legal issue also remains unsettled: courts are still confronting the question of how federal regulation of prediction market contracts interacts with state and tribal gambling laws.
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