On September 16, 2026, the Ninth Circuit held that two California tribes are likely to succeed on the merits of their claim that Kalshi’s sports event contracts on their lands violate the Indian Gaming Regulatory Act. The decision in Blue Lake Rancheria v. Kalshi, Inc., No. 25-7504, is the first circuit-level ruling to address prediction markets from the tribal side. It will not be the last.

Most coverage has focused on the court’s conclusion that a sports event contract is a sports bet. That holding matters. Two others matter more. The court held that a wager occurs where the bettor stands, not where the exchange’s servers sit. It also held that a tribe may enforce its gaming regime against a company that never signed anything. Together, those holdings give every tribe with a gaming ordinance a path to federal court.

Background

Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians operate class III gaming under secretarial procedures the Department of the Interior issued in 2024. The procedures exist because California failed to negotiate successor compacts in good faith, a failure the Ninth Circuit confirmed in 2022. Sports betting remains illegal in California.

The tribes sued Kalshi and its retail distributor, Robinhood, arguing that Kalshi’s sports event contracts are unauthorized class III gaming when purchased on tribal land. Judge Jacqueline Scott Corley of the Northern District of California denied a preliminary injunction on three grounds:

• The transactions did not occur on Indian lands.
• The Unlawful Internet Gambling Enforcement Act (UIGEA), not IGRA, governed.
• The Commodity Exchange Act (CEA) placed the contracts beyond UIGEA’s reach.

A unanimous panel of Chief Judge Mary H. Murguia and Judges M. Margaret McKeown and Richard A. Paez reversed on the IGRA claim. Judge McKeown wrote the opinion. The panel affirmed dismissal of the tribes’ Lanham Act claim and remanded for the district court to weigh the remaining preliminary injunction factors.

The Holdings

Sports event contracts are class III gaming. IGRA defines class III gaming as everything that is not class I or class II. National Indian Gaming Commission regulations list “any sports betting” as class III. The court treated the question as functional. The user pays to take a position on an uncertain sporting outcome and collects if the outcome occurs. Kalshi offers point spreads, over/unders, player props, and parlays. It calls the parlays “combos.”

The court imagined a user on the floor of the Blue Lake Casino Hotel who places the same $100 bet on the Giants through DraftKings and through Kalshi. “The bettor, the place, the stake, and the contingency remain the same. The only thing that changes is Kalshi’s vocabulary.” The court’s found that, “Kalshi may reshuffle the cards, but it cannot change the hand.”

The contracts are located on Indian lands. Kalshi argued that its contracts are executed in New York, on infrastructure far from any reservation. The court disagreed. It relied on California v. Iipay Nation of Santa Ysabel, where it had held that online bingo played from off-reservation was not gaming on Indian lands, because the bet is placed where the player sits. The same logic runs in reverse here. A user who buys a contract while on a reservation enters into it on Indian lands. IGRA requires only that some of the gaming activity occur there.

A nonparty can violate a tribe’s gaming regime. This is the holding with the longest reach. Kalshi argued that it cannot violate a compact or secretarial procedure it never signed. The court rejected the premise that a compact is merely a contract.

IGRA lets a tribe sue to enjoin “a class III gaming activity” conducted in violation of a compact. The object of the injunction is the activity, not a signatory. The tribes’ secretarial procedures require all class III gaming to comply with tribal ordinances. Those ordinances prohibit all gaming on the rancherias except as expressly authorized. The court called this a “closed system.” Unauthorized gaming by anyone violates the ordinance, and therefore the procedures.

The court also rejected the argument that only the Secretary of the Interior can enforce secretarial procedures. That reading would leave tribes without a compact worse off than tribes with one. It would also reward the state whose refusal to negotiate made the procedures necessary.

Neither UIGEA nor the CEA displaces IGRA. UIGEA excludes transactions on CFTC-registered exchanges from its definition of a “bet or wager.” Kalshi argued that this carve-out removes its contracts from gaming law entirely. The court found the argument foreclosed by UIGEA’s own text, which disclaims any intent to alter IGRA in civil proceedings involving Indian lands.

On the CEA, the court relied first on its August 28 decision in KalshiEX v. Assad, which held that Kalshi’s sports contracts are likely not swaps. The court then went further. Even if the contracts were swaps, the CFTC’s “exclusive jurisdiction” consolidates federal agency oversight in one regulator. It does not exempt a transaction from every other federal statute. The CEA may decide whether a contract can trade on an exchange. It does not decide whether the same transaction satisfies IGRA when a user enters into it on tribal land.

The Lanham Act claim fails. Kalshi advertised “Sports Betting [Is] Legal in all 50 States on Kalshi.” The court treated the statement as a layperson’s opinion about the law. Such opinions are not actionable absent a clear ruling on the question. The court did not endorse the advertisement. It held only that the law is too unsettled for the statement to be false.

Why It Matters

Tribes now have their own front. The prediction market litigation has largely been a contest between exchanges and state regulators over CEA preemption. Blue Lake adds a sovereign with its own federal statute and its own cause of action.

The alternative holding is built to last. The Third Circuit held in KalshiEX v. Flaherty that the contracts are likely swaps and that the CEA preempts New Jersey’s gaming laws. If the Supreme Court takes up that split and sides with Kalshi, state enforcement may weaken. Blue Lake would not. Its CEA analysis holds even if the contracts are swaps, because the CEA’s preemption clause reaches state and local gaming law, not federal statutes like IGRA.

The ruling is a template. Its reasoning rests on features common to many tribal gaming regimes—an ordinance prohibiting unauthorized gaming, incorporated into a compact or secretarial procedures. The Tenth Circuit’s 2026 decision in Comanche Nation v. Ware, which the panel cited, points the same direction on who may sue. Tribes outside the Ninth Circuit are already litigating these questions.

The practical remedy is geographic. If Judge Corley grants the injunction, Kalshi and Robinhood will likely need to block sports contracts on the plaintiff tribes’ lands. The technology exists. Sportsbooks geofence every day. Each successful tribal suit would add to the map.

What Comes Next

The case returns to Judge Corley on irreparable harm, the balance of equities, and the public interest. Kalshi has sought en banc review of Assad and may do the same here. New Jersey has asked the Supreme Court to review Flaherty. With circuits divided, the Court may take up the issue as early as its October 2026 Term. The tribal dimension may not reach the Court in that vehicle. It will reach it eventually.

Tribes that operate class III gaming should review their ordinances and compact or procedure language now. The strength of a claim under Blue Lake turns on whether the tribe’s regime prohibits unauthorized gaming by anyone, not just by the tribe.

For more information, please contact Josh Escovedo, Partner and Co-Managing Partner of Buchalter’s Sacramento office and the Co-Chair of the firm’s Sports Industry group.

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