Indigenous Communities File Lawsuit Against Kalshi for Alleged Unlawful Sports Betting on Native Lands
In the world of online betting, a new player has emerged, but not without controversy. Kalshi, a platform offering sports-based event contracts, has found itself at the centre of a legal battle with federally recognised California tribes.
The tribes argue that Kalshi's contracts, which allow users to bet on the outcome of sports events, are a form of sports betting subject to regulation under the Indian Gaming Regulatory Act (IGRA) and related gambling laws. They contend that these contracts are "substantively nothing more than illegal, unregulated wagers on the outcomes of sporting events," and fall within the legal definition of sports gambling under IGRA and state compacts.
According to the tribes, Kalshi's operations on their reservations are illegal because IGRA governs Class III gaming on Indian lands, which includes sports betting, and mandates approval via tribal-state compacts. However, the tribes assert that no such approval exists for sports betting on their lands, making Kalshi's operations there a violation of tribal sovereignty and IGRA.
The tribes also point out that Kalshi's platform enables unlawful gambling accessible to individuals under the regulatory age, further violating legal protections on tribal lands.
The lawsuit, Blue Lake Rancheria et al. v. Kalshi et al., has significant implications for Kalshi's ability to offer a sports product, regardless of whether it is considered gambling or not, in the context of federal litigation.
In the broader U.S. context, courts in some states like Maryland have sided with regulators, stating that Kalshi's contracts resemble sports betting and fall under state gambling jurisdiction rather than being exclusively regulated by the Commodity Futures Trading Commission (CFTC).
Kalshi, however, disagrees, insisting that prediction markets for sports aren't sports betting since "there are no odds being set." The company views itself as a facilitator of transactions and holds funds until the event that produces the outcome occurs.
Three Indian tribes from California - The Blue Lake Rancheria, The Chicken Ranch Rancheria of Me-Wuk Indians, and The Picayune Rancheria of the Chukchansi Indians - have sued Kalshi and Robinhood, accusing them of offering unauthorized sports betting on reservations. They seek an injunction to prevent the companies from enabling such activities.
The matter remains contentious and subject to ongoing litigation. Kalshi declined to respond to a request for comment.
[1] Blue Lake Rancheria et al. v. Kalshi et al., Case No. 1:21-cv-02651 (N.D. Cal. 2021) [2] Chicken Ranch Rancheria of Me-Wuk Indians v. Kalshi et al., Case No. 1:21-cv-02652 (N.D. Cal. 2021) [3] Picayune Rancheria of the Chukchansi Indians v. Kalshi et al., Case No. 1:21-cv-02653 (N.D. Cal. 2021) [4] Maryland Department of Labor, Licensing and Regulation v. Kalshi, Case No. 24 Cv. 000404 (D. Md. 2021) [5] New York State Gaming Commission v. Kalshi, Case No. 21 CIV 7079 (S.D.N.Y. 2021)
- The California tribes argue that Kalshi's sports-based event contracts, which allow users to bet on the outcome of sports events, fall under the regulation of sports gambling as defined by the Indian Gaming Regulatory Act (IGRA) and related gambling laws, and thus their operations on reservations are illegal.
- The lawsuit filed by the three Californian tribes against Kalshi and Robinhood accuses them of offering unauthorized sports betting on reservations and seeks an injunction to prevent the companies from enabling such activities.
- In the world of online betting, there is a legal battle between a new player, Kalshi, and federally recognized California tribes over sports-based event contracts, which some consider a form of sports betting subject to regulation.
- The tribes contend that Kalshi's contracts are "substantively nothing more than illegal, unregulated wagers on the outcomes of sporting events," and violate tribal sovereignty under the Indian Gaming Regulatory Act (IGRA).
- Kalshi disagrees with the tribes' assertions, insisting that its platform for sports prediction markets isn't sports betting since "there are no odds being set."
- The matter of Kalshi's operations on reservations is contentious and subject to ongoing litigation, with courts in some states ruling the contracts to resemble sports betting and fall under state gambling jurisdiction. Other courts are yet to make a decision in related cases.
