Blue Lake Rancheria v. Kalshi, Inc.
The Ninth Circuit reversed in part the district court's denial of a preliminary injunction sought by Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians against Kalshi, Inc. and Robinhood Markets, Inc. The tribes alleged that Kalshi's "sports event contracts"—binary derivatives that pay out based on sporting event outcomes—constituted illegal class III gaming under the Indian Gaming Regulatory Act when offered on tribal lands in violation of secretarial procedures that function as compacts under 25 U.S.C. § 2710(d)(7)(A)(ii). The court held that the tribes were likely to succeed on the merits, concluding that Kalshi's contracts are class III gaming activities because they functionally constitute sports betting (requiring consideration, chance, and prize), that the contracts are "located on Indian lands" when users enter into them from tribal territory, and that Kalshi violated the tribes' gaming ordinances incorporated into their secretarial procedures by offering sports betting without tribal authorization. The court affirmed the district court's rejection of the tribes' Lanham Act § 43(a)(1)(B) false advertising claim challenging Kalshi's statement that "Sports Betting [Is] Legal in all 50 States on Kalshi," holding that this constituted a nonactionable lay opinion about legality rather than a factual statement capable of being literally false or deceptive.
The decision matters for its functional analysis of what constitutes class III gaming activity under IGRA, rejecting formalistic reliance on how an operator labels its product. The court held that Kalshi's characterization of its sports wagers as "event contracts" or "swaps" regulated under the Commodity Exchange Act does not immunize them from IGRA, applying a substance-over-form test focused on whether the activity involves the traditional elements of gaming (consideration, chance, and prize) rather than regulatory classification. The court also clarified that tribes operating under secretarial procedures prescribed by the Secretary of the Interior possess the same cause of action under § 2710(d)(7)(A)(ii) to enjoin unauthorized class III gaming as tribes operating under negotiated compacts, rejecting Kalshi's argument that only the Secretary may enforce secretarial procedures under § 2710(d)(7)(A)(iii). Significantly, the court held that gaming activity is "located on Indian lands" when the user initiates the transaction from tribal territory, even if the operator's servers and infrastructure are located off-reservation, applying the same territorial analysis the circuit used in Iipay Nation to determine UIGEA violations. The court further held that the Commodity Exchange Act's grant of "exclusive jurisdiction" to the CFTC does not displace IGRA's separate regulatory scheme governing gaming activities occurring on Indian lands, reasoning that the CEA regulates derivatives trading on designated contract markets while IGRA governs class III gaming activities with a territorial nexus to tribal lands.