Securities Regulation Daily Wrap Up, FEDERAL PREEMPTION—N.D. Cal.: California tribes not granted injunction against Kalshi sports betting, (Nov 12, 2025)

By Lene Powell, J.D.

According to the court, Kalshi “may have found a way around prohibitions on interstate gambling” based on its status as a CFTC-registered exchange.

Adding to a growing body of conflicting rulings on sports betting, a federal district court in California declined to prohibit the Kalshi exchange from offering event contract trading on tribal lands. The court ruled that the Commodity Exchange Act (CEA) and Unlawful Internet Gambling Enforcement Act (UIGEA) govern the contracts, not the Indian Gaming Regulatory Act (IGRA). The court also determined that it did not have jurisdiction to decide whether the event contracts violate the CEA (Blue Lake Rancheria v. Kalshi Inc., No. 25-cv-06162-JSC (N.D. Cal. Nov. 10, 2025)).

The court acknowledged potential impacts on the tribal plaintiffs.

“[T]he Court does not take lightly Plaintiffs’ concerns about the effects Kalshi’s activities might have on tribal sovereignty and the Tribes’ finances,” the court wrote.

“Indeed, by self-certifying the legality of its event contracts in [a] way that insulates its activities from judicial review, Kalshi may have found a way around prohibitions on interstate gambling that were created with the Tribes’ best interest in mind,” the court concluded.

The decision regarding the tribes’ authority to regulate gambling on their lands adds a new wrinkle to expanding litigation between Kalshi and several states including Nevada, New Jersey, and others.

Betting on Indian lands? KalshiEx, Robinhood Derivatives, LLC, and Robinhood Markets, Inc., operate a nationwide, federally registered, internet-based exchange where users trade contracts based on the occurrence of real-world events such as elections and sports matches.

Three federally recognized tribes requested a preliminary injunction to prevent the defendants from offering the contracts on their federally recognized tribal lands. The tribes argued that the defendants are offering “Class III gaming”—high stakes games usually associated with Nevada-style gambling—in violation of the IGRA.

No jurisdiction over Kalshi. The court first found that the tribes did not show a likelihood of success on the jurisdictional requirement. The tribes’ compact and secretarial procedures outline what the tribes are “authorized and permitted to operate” under the IGRA, and are silent about what companies like the defendants can do on the internet.

The court was not swayed by the argument that the IGRA is silent about third parties because tribes are the only entities authorized to conduct Class III gaming on their lands.

“Maybe, but that does not mean the compact or secretarial procedures prohibit Defendants’ conduct,” the court wrote.

Next, the court found that, in any case, the UIGEA controls and does not prohibit Kalshi’s contracts. According to the court, the UIGEA applies to interstate (or state-to-Indian-lands and vice versa) gaming transactions via the internet, whereas IGRA covers Class III gaming activities that take place exclusively within Tribal lands. The UIGEA expressly excludes transactions conducted on a CFTC-registered entity like Kalshi from the term “bet or wager.”

“Since it is undisputed Kalshi is a registered entity under the Commodity Exchange Act, and that its transactions are conducted on the Kalshi internet site, its internet contracts are not bets or wagers under the UIGEA and therefore do not constitute ‘unlawful internet gambling’ even if the contracts are received, placed or transmitted from persons on Indian lands where internet gambling is illegal,” the court stated.

The court did not find any applicable exception under tribal-state compacts or intratribal carveouts.

No jurisdiction over contracts. The tribes did not show that the court had jurisdiction to decide whether Kalshi’s event contracts violate the CEA, the court said. That decision belonged to the CFTC, which has “exclusive jurisdiction” over its contract markets. The plaintiffs also did not show that the contracts are presumptively unlawful under the CEA, its “special rule” for event contracts, or CFTC regulations for self-certification.

No deceptive advertising. The court determined that certain Kalshi statements were not deceptive advertising under the Lanham Act.

A Kalshi advertisement stating that “Sports Betting [is] Legal in all 50 States on Kalshi” was “merely stating an opinion its product is legal,” said the court. Given that multiple courts have agreed with it, the plaintiffs did not show that opinion is literally false or that Kalshi lacks a good-faith belief in the opinion’s truth.

Kalshi also posted on social media that “Really hope kids in high school still do this,” with a photo of four screens playing basketball games. It then replied to the post, stating “Bet on March Madness in all 50 states” followed by a URL. According to the court, this did not necessarily imply that people under 18 can gamble on sports, which would be false.

The case is No. 25-cv-06162-JSC.

Judge: Scott Corley, J.

Attorneys: Lester John Marston (The Law Office of Lester J. Marston) for Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians and Picayune Rancheria of the Chukchansi Indians. Christopher C. Wheeler (Farella Braun + Martel LLP) for Kalshi Inc. and KalshiEX LLC. Antony L. Ryan (Cravath, Swaine & Moore LLP) for Robinhood Markets, Inc. and Robinhood Derivatives LLC.

Companies: Blue Lake Rancheria; Chicken Ranch Rancheria of Me-Wuk Indians; Picayune Rancheria of the Chukchansi Indians; Kalshi Inc.; KalshiEX LLC; Robinhood Markets, Inc.; Robinhood Derivatives LLC

MainStory: TopStory FinancialIntermediaries Derivatives ExchangesMarketRegulation FederalPreemption Swaps CaliforniaNews