The U.S. Court of Appeals for the Ninth Circuit has handed Kalshi another loss in its bid to offer sports contracts under federal regulation nationwide.
The Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians had last November’s denial of a preliminary injunction reversed in part on Wednesday. The tribes accused prediction market operators of violating the Indian Gaming Regulatory Act by offering what they considered to be sports betting on their lands.
This comes just weeks after the appeals court upheld a ruling that allowed the Nevada Gaming Control Board to treat sports contracts from Kalshi as sports betting. That directly conflicts with the Third Circuit‘s ruling in favor of Kalshi, which pushed the chances of the issue hitting the Supreme Court even closer to reality.
The ruling does not yet mean Kalshi has to stop offering sports contracts on tribal land.
Kalshi can ‘reshuffle’ but not ‘change’
The definition of class III gaming under IGRA of “all forms of gaming that are not class I gaming or class II gaming” is enough to broadly include sports event contracts under class III, according to the opinion.
The opinion quoted its recent findings that the substance of the sports contracts is sports gambling, adding:
“the similarities between a sports event contract, which even Kalshi calls ‘sports betting,’ and a traditional sports wager are overwhelming.”
The court offered a matter-of-fact example:
Imagine a user standing on the floor of the Blue Lake Casino Hotel who downloads Kalshi and DraftKings, a classic online sports betting app. On Kalshi, she buys a $100 contract that pays if the San Francisco Giants win. On DraftKings, she wagers $100 on the same outcome. The bettor, the place, the stake, and the contingency remain the same. The only thing that changes is Kalshi’s vocabulary.
Kalshi may reshuffle the cards, but it cannot change the hand: Its sports event contracts are class III gaming.
Lanham Act argument still fails
The Tribes wanted Kalshi held accountable for its advertising that said sports betting was available in all 50 states, but the Appeals court did not shift on that decision.
Since the legality of Kalshi’s products is still “unsettled,” there is no viable Lanham Act claim.
We have previously held that “[a]bsent a clear and unambiguous ruling from a court or agency of competent jurisdiction, statements by laypersons that purport to interpret the meaning of a statute or regulation are opinion statements, and not statements of fact,” the opinion reads.
