US Court Backs Tribes Against Kalshi as Senate Sinks Crypto Market Bill
A Ninth Circuit ruling and a failed Senate vote both went tribal gaming's way this week, keeping the Kalshi sports-contract fight unresolved.
This article was produced with AI assistance and edited by the ON360 newsroom.
Tribal gaming interests scored wins on two separate fronts in the U.S. fight over sports-prediction markets this week, though neither result settles the underlying dispute. The Ninth Circuit Court of Appeals found that two California Tribes are likely to succeed in their claim that Kalshi’s sports event contracts violate the Indian Gaming Regulatory Act (IGRA) when offered on Tribal land, according to Gambling Insider. A day earlier, the U.S. Senate failed to advance the Digital Asset Market Clarity Act, a bill Tribal organizations had opposed over its gaming provisions.
Neither outcome ends the fight. The California case now returns to a district court, and the broader question of whether the Commodity Futures Trading Commission (CFTC) has authority over sports-linked contracts remains open.
Ninth Circuit sides with Blue Lake and Chicken Ranch
The appeals court reversed a lower-court ruling in a case brought by Blue Lake Rancheria and Chicken Ranch Rancheria against Kalshi. The panel said IGRA analysis turns on function, not labels. “IGRA does not ask whether the operator labels the product a bet or an event contract, or something else. It asks what the activity looks like,” the judges wrote, per Gambling Insider.
The court concluded Kalshi’s sports contracts amount to Class III gaming located on Indian lands whenever a user enters them from Tribal territory. It also rejected Kalshi’s argument that federal commodities law and the Unlawful Internet Gambling Enforcement Act override the Tribes’ IGRA claim, echoing reasoning from an Aug. 28 Ninth Circuit ruling in a separate Nevada case against the same company.
The case now heads back to district court, where a judge must weigh the remaining factors for a preliminary injunction.
CLARITY Act stalls short of 60 votes
The Senate’s cloture vote on the CLARITY Act failed 49-50, well short of the 60 votes needed to proceed. Tribal groups had lobbied against the bill unless it explicitly preserved IGRA, Tribal-state gaming compacts and Tribal gaming authority.
Indian Gaming Association Chairman David Z. Bean called the vote “an important victory for Tribal sovereignty” but added it “is not the end of this fight,” according to Gambling Insider. Concerns over the bill had already surfaced at an Aug. 4 Senate Indian Affairs Committee roundtable, where Tribal leaders also raised objections to the CLARITY Act’s decentralized-finance provisions. Other unresolved issues, including ethics and divestment rules tied to federal officials’ digital-asset holdings, also factored into the bill’s failure.
CFTC talks fall short of formal consultation
The CFTC remains the central unresolved front. One day before the Senate vote, leaders from 17 Tribal organizations met with CFTC Chairman Michael S. Selig. The National Congress of American Indians (NCAI) and the Indian Gaming Association welcomed the meeting but said it did not amount to the formal government-to-government consultation they had requested.
NCAI President Mark Macarro argued the agency has overstepped its mandate. “Nothing in the legislative history of the CEA suggests that Congress ever intended the CFTC to become a backdoor regulator of gaming,” he said, per Gambling Insider.
For Ontario operators and regulators watching from a distance, the case is a reminder that the legal status of sports-linked prediction contracts remains unsettled south of the border, even as Kalshi and similar platforms continue to expand. Ontario’s regulated market, overseen by the AGCO and iGaming Ontario, requires licensed sportsbooks to offer tools such as deposit limits and self-exclusion, a structure the U.S. litigation is, in effect, arguing over from scratch.
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