California Tribe Challenges Kalshi's Sports Betting Practices

Kalshi offers sports bets on tribal reservations where sports betting is banned

A Southern California tribe told the U.S. Supreme Court on Tuesday that Kalshi is taking sports wagers on its reservation, where sports betting is prohibited, and urged the justices to review and reverse a federal appeals ruling that shields the prediction market from New Jersey's gambling laws.

The Cabazon Band of Cahuilla Indians filed a friend-of-the-court brief supporting the petition New Jersey officials filed in Flaherty v. KalshiEX, No. 26-299. The state wants the court to review an April 6 decision by the 3rd U.S. Circuit Court of Appeals, which ruled 2-1 for Kalshi and upheld an injunction blocking New Jersey from enforcing its sports gambling laws against the company's sports event contracts.

The tribe acknowledged that the 3rd Circuit case does not involve tribes directly. But it argued the ruling's reasoning would presumably hand the Commodity Futures Trading Commission exclusive jurisdiction over Kalshi's sports contracts on the Cabazon Reservation and other reservations, undercutting the "exclusive right to regulate gaming activities on Indian lands" that Congress gave tribes in the Indian Gaming Regulatory Act.

To show the activity is happening now, the brief attached declarations from two tribal officials. Jonathan Rosser, the tribe's director of legal affairs, said that on Sept. 22, while sitting in his office on the reservation, he downloaded the Kalshi app to a work phone and placed a $25 bet on the Minnesota Vikings against the Tampa Bay Buccaneers that would pay $45.66 if Minnesota won.

Jose Escobar Rivera, executive director of the Cabazon Tribal Gaming Commission, said wagering on sporting events is not authorized on the reservation and violates California tribe's federally approved gaming ordinance, its gaming compact with California and IGRA. The brief says the same activity is taking place "on hundreds of other Indian reservations around the country."

Tribe Points to Circuit Split

The Cabazon Band argued the court should take the case because the 3rd Circuit's approach conflicts with two recent 9th Circuit decisions: an Aug. 28 ruling in KalshiEX v. Assad and a Sept. 16 ruling in Blue Lake Rancheria v. Kalshi. In the Blue Lake case, a 9th Circuit panel held that two California tribes were likely to succeed on claims that Kalshi's sports contracts on tribal lands violate IGRA and their gaming ordinances, and it sent the case back to a district court to weigh the remaining requirements for an injunction.

“The likelihood that Congress intended to repeal sub silentio this explicit grant of exclusive tribal authority through obscure language in 2010 legislation dealing with commodity regulation seems vanishingly remote,” the brief says.

Kalshi, which operates as a federally regulated derivatives exchange, has argued in courts around the country that its sports contracts fall under CFTC oversight rather than state gambling law. New Jersey's petition counters that Kalshi is offering sports bets without following the rules that apply to licensed US sportsbooks, including the operators behind NJ online sports betting. The International Association of Gaming Regulators and the North American Gaming Regulators Association have also filed a brief backing the state.

The tribe holds significant sway in this dispute

The Cabazon Band carries particular weight in the debate. Its 1987 Supreme Court victory in California v. Cabazon Band of Mission Indians held that California could not regulate or prohibit the tribe's gaming, and Congress passed IGRA the following year. The brief cites National Indian Gaming Commission figures showing tribal gaming generated $46.2 billion in revenue in 2025.

Under IGRA, a tribe that wants to offer Class III gaming, which includes sports betting, must adopt a gaming ordinance approved by the NIGC chair and negotiate a compact with its state that is approved by the governor and the Interior secretary, the brief notes. The tribe said Kalshi's activities bypass that system and divert revenue that Congress intended to go to tribes.

States have pressed the same fight in their own courts. Michigan barred Kalshi from sports wagers in September through a preliminary injunction that carries a $500,000 daily fine for violations. The Supreme Court has not yet said whether it will hear New Jersey's case.