The court fight over prediction markets in California has moved up a level. Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of the Chukchansi Indians are appealing to the Ninth Circuit after a federal judge in the Northern District of California declined to block Kalshi from offering sports event contracts, leaving the platform free to operate across the state while the appeal plays out.
Why the District Court Said No
The tribes argued that Kalshi's sports contracts amount to sports wagering conducted outside the tribal framework, infringing on the exclusivity California tribes hold under the Indian Gaming Regulatory Act. The district court was not persuaded. Because Kalshi operates as a Designated Contract Market regulated by the Commodity Futures Trading Commission, the court found that its event contracts are not bets or wagers under the federal Unlawful Internet Gambling Enforcement Act, and that the tribes had not shown a likelihood of success on their IGRA claim.
That reasoning, if it survives appeal, gives federally supervised exchanges a lane into every state regardless of local gaming rules. It is exactly the outcome tribal leaders warned about at the July gaming lawmakers summit in San Diego, where prediction markets were described as the biggest threat the industry has faced and blamed for revenue losses tribal analysts peg at roughly 5 percent. Our report on the tribes' 2028 online wagering push covers how the threat is reshaping ballot strategy.
A National Fight, State by State
California is one front in a war being fought everywhere at once. In July alone, Kalshi lost an emergency motion in Nevada and faces potential contempt proceedings over geofencing compliance, Michigan's gaming board secured a two week restraining order against the platform, and Kalshi itself sued Ohio's gaming regulator. Minnesota heard oral arguments on its prediction market ban, which takes effect August 1, and North Carolina lawmakers are weighing a 6 percent tax on prediction market revenue rather than a ban.
The highest stakes case is in New Jersey, where the question of whether the Commodity Futures Trading Commission's jurisdiction preempts state gaming law is moving toward the United States Supreme Court. A ruling there would settle the California question too, potentially before the Ninth Circuit finishes its work.
What Is Actually at Stake in California
California tribes generate roughly 13 billion dollars a year in gaming revenue, more than any other state's tribal sector. Because California has no state regulated online sportsbooks or casinos, prediction markets are effectively the only regulated way to trade on sports outcomes from inside the state, which is precisely why tribes see them as sports betting wearing a different uniform. The Commodity Futures Trading Commission has so far allowed sports event contracts to stand, and a friendlier federal posture toward the industry has emboldened platforms to expand their offerings.
What Comes Next
Briefing at the Ninth Circuit will run through the fall, and the New Jersey case could reach the Supreme Court's docket in the coming term. For now Kalshi remains available to Californians, unavailable only in Nevada among the fifty states, with Minnesota set to join the exclusion list in August. Our earlier explainer on the original California lawsuit and our report on the federal bill that would classify event contracts as gambling cover the rest of the landscape.
