Adding to mounting legal pressure on prediction market platform Kalshi, a coalition of California tribes has filed for an injunction to stop the company from offering sports-related event contracts on tribal land and advertising its services as “legal in all 50 states.” At the same time, a Nevada court has rejected Kalshi’s attempt to bypass discovery, while the company presses ahead with partnerships and reports record trading activity.
California tribes challenge Kalshi contracts and advertising
Three federally recognised tribes — the Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians — filed a lawsuit in July against Kalshi and Robinhood. They allege that the companies are disguising illegal sports betting as event contracts, in violation of the Indian Gaming Regulatory Act (IGRA) and tribal sovereignty.
The tribes’ latest injunction seeks to block Kalshi from offering sports-related event contracts on tribal lands and promoting its services nationwide as legal in all 50 states. The filing highlights two recurring contract types:
- “Will <team> win <title>?”
- “Will <team> win <event>?”
The tribes also accuse Kalshi of false advertising under the Lanham Act, noting that its marketing campaigns have referred to sports betting and even suggested March Madness betting among high schoolers, which would be illegal in all jurisdictions.
“These statements are not susceptible to more than one reasonable interpretation; the only reasonable interpretation is that Kalshi offers ‘sports betting’ and that sports betting is ‘legal in all 50 states.’ These statements are literally false,” the injunction stated.
Wisconsin tribes also file lawsuit
The Ho-Chunk Nation of Wisconsin has filed a separate federal lawsuit against Kalshi and Robinhood in the Western District of Wisconsin. The suit accuses the companies of violating IGRA and engaging in racketeering and corruption by offering sports-related contracts near tribal lands. Kalshi maintains that its products are financial contracts regulated by the Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA), not gambling products.
Nevada court orders discovery in separate case
In another blow, Kalshi’s legal manoeuvre in Nevada was dismissed. The company had argued that its dispute with state regulators required no fact-finding and that the court should decide the case purely on legal grounds, asserting that the CFTC has exclusive jurisdiction.
However, Judge Brenda Weksler of the Nevada District Court ruled that discovery is necessary to examine how Kalshi’s operations interact with both federal and state law. The ruling gives the Nevada Gaming Control Board and the Nevada Resorts Association access to deeper information about Kalshi’s contracts and compliance. Weksler stressed that while Kalshi may self-certify contracts as swaps under CFTC oversight, this does not automatically shield them from state regulation.
Kalshi expands with STATSCORE partnership
Despite intensifying legal scrutiny, Kalshi is expanding its operations. The company has signed a three-year agreement with European sports data provider STATSCORE, giving users access to live scores and statistics for major competitions, including the National Football League (NFL), National Collegiate Athletic Association (NCAA) football, National Basketball Association (NBA), Major League Baseball (MLB), National Hockey League (NHL), and Formula 1.
“STATSCORE’s precision and depth in sports data make them a great partner to enhance our platform’s sports products,” said Sara Slane, Kalshi’s Head of Corporate Development. STATSCORE, acquired by LSports in 2022, already provides data to leading operators such as Kambi, Pragmatic Play Sports, Aristocrat, EveryMatrix, and Playtech.
Record NFL trading volume
Kalshi reported record-breaking volumes at the start of the NFL season. CEO Tarek Mansour announced the platform processed $441 million in trading activity between 4 and 9 September, with $200 million on Sunday alone.
The trading surge follows Kalshi’s rollout of prop-style and parlay-style contracts, which mirror sportsbook offerings such as point spreads, player props, and season milestones. These contracts are self-certified with the CFTC and are subject to restrictions barring NFL and NCAA players, league staff, and their families from participation.
Regulatory clarity on the horizon?
The CFTC and US Securities and Exchange Commission (SEC) will hold a joint roundtable on 29 September to address event contracts and prediction markets. Both agencies have warned that these “novel products” remain clouded by legal uncertainty. Industry veteran Robert Walker, a longtime Nevada sportsbook director, told SiGMA News the agencies must address one fundamental issue:
“Why is the CFTC letting sports betting companies pretend they’re commodity traders? If it looks like sports betting, acts like sports betting, and takes money like sports betting, then it should be regulated like sports betting — by the states.”
As Kalshi battles multiple lawsuits while simultaneously growing its user base, the coming months could prove decisive for how prediction markets are regulated in the United States.
