Three California tribes filed suit against Kalshi and Robinhood in the U.S. District Court (Northern District of California) on Tuesday over the offering of sports event contracts, which they claim amounts to illegal sports gambling operations, on tribal lands.
The Tribes are seeking declaratory and injunctive relief to prevent the defendants from “engaging in illegal sports gambling on the Tribes’ respective reservations in direct violation of the Indian Gaming Regulatory Act (IGRA).” They also advance a civil RICO claim seeking 3x damages in the 71-page complaint.
The plaintiffs in the case are: the Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians.
Unlike the three active court cases between Kalshi and specific states (or state gaming regulatory boards), in this case:
- Kalshi is the defendant rather than the plaintiff (The CA tribes are playing offense rather than defense).
- The tribes are seeking not just injunctive relief but also declaratory relief and money damages.
- The case was filed in federal court with a demand for a jury trial.
If the tribes were to win this case, Kalshi would likely have to geofence its sports event contract offerings so they are not available on tribal land of any of California’s 109 federally recognized Indian tribes.
Gaming and sports betting lawyer Daniel Wallach, who first broke the news of the new case filing on X, points out that such a result “will undercut Kalshi’s irreparable harm argument in the state lawsuits which is predicated on it being too costly to use geolocation technology.”
Tribes go on offense against sports event contracts
While tribal gaming entities have already voiced legal opposition to Kalshi’s sports event contracts by signing onto amicus briefs in Kalshi’s cases against New Jersey and Maryland, they are now filing suit as the plaintiff.
As Wallach noted on X, amicus briefs are “not a vehicle to seek affirmative relief” and in those cases, “if states win, the outcome is dismissal of lawsuit.” What the tribes are seeking is a “vehicle to obtain injunctive relief, damages.”
The complaint states that the Tribes are “seeking a preliminary and permanent injunction against the defendants to prevent them from engaging in illegal sports gambling on the respective reservations in direct violation of the Indian Gaming Regulatory Act.”
While Kalshi’s cases against the states focus on federal preemption (affirming that the CFTC alone may regulate its event contracts), this case primarily focuses on the question of whether those contracts violate federal IGRA law, which grants tribes exclusive authority to regulate gaming on tribal lands.
Seeking damages against Kalshi and Robinhood
The complaint also contains a civil RICO claim against Kalshi and Robinhood, seeking 3x damages for “injuries to their business caused by defendants’ violation of the Racketeer Influenced and Corrupt Organizations Act.”
The Tribes allege that Kalshi and Robinhood’s sports contracts violate the Commodity Exchange Act (CEA) and CFTC Regulations prohibiting contracts involving gaming.
“The scheme to defraud involved the systematic misrepresentation of unlawful gaming contracts as legitimate commodity contracts tradable on a CFTC regulated exchange, in direct conflict with the CEA and CFTC regulations thereunder.”
The complaint alleges that the defendants are a racketeering enterprise along with the “individual officers, directors, agents, and/or employees who knowingly participated in the Gaming Racket’s affairs.”
Listed among the defendants in the case are “DOES 1-20,” which are reserved for others in the enterprise. Presumably, it’s possible we see individual stakeholders, market makers or other related parties named in the case at a later date.
CA Tribes take aim at Kalshi advertising
The legal action also “seeks to redress false and misleading statements of fact made in commercial advertising or promotion that misrepresent the nature, characteristics, or qualities of defendant Kalshi’s activities.”
The complaint contains screenshots showing Kalshi advertising its product as “the first nationwide legal sports betting platform” and “sports betting legal in all 50 states on Kalshi.”
Whether or not some aspects of Kalshi’s advertising tactics will bear on the case remains to be seen.
What we do know is these are two well-funded entities with ample legal firepower and a lot at stake. Expect a response from Kalshi sooner than later.
Meanwhile, we await a decision in the Maryland case, with Kalshi’s merits brief also due in the Third Circuit Court on Thursday in New Jersey’s expedited appeal of the court’s decision to grant Kalshi preliminary injunction.
