Court Ruling Bolsters Kalshi in U.S. Gambling Debate

A federal court ruling in California this week handed event-trading platform Kalshi a significant legal win and added new momentum to the national debate over whether prediction markets constitute gambling.

The U.S. District Court for the Northern District of California denied a request from three tribes to block Kalshi from operating on tribal lands. The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians argued that Kalshi’s activity violates the Indian Gaming Regulatory Act (IGRA), which gives tribes exclusivity over Class III gambling in the state.

 

Item	Jurisdiction / Parties	Status / Outcome
California Ruling	NDCA — Blue Lake, Chicken Ranch, Picayune vs Kalshi	Court denied tribal injunction; CFTC/UIGEA framing cited
PrizePicks Partnership	PrizePicks / Kalshi — 38 states	Live; offered via FCM (Performance Predictions II)
National Litigation	Multiple states & tribes (NJ, NV, WI, MA, NY, OH, etc.)	Ongoing — mixed injunctions, appeals, cease-and-desists

 

In its ruling, the court held that Kalshi’s federally regulated contracts fall under the Commodity Futures Trading Commission’s (CFTC) jurisdiction. Because of that status, the court said the Unlawful Internet Gambling Enforcement Act applies and Kalshi’s “internet contracts are not bets or wagers” even if accessed from tribal land.

The judge acknowledged tribal concerns about sovereignty and economic impact but said the plaintiffs did not show a likelihood of success under IGRA. The decision leaves Kalshi free to operate while the case continues. California is not the only state where tribal governments are seeking to curb Kalshi’s reach. Wisconsin’s Ho-Chunk Nation has filed a similar lawsuit.

Kalshi is also fighting regulators in several states. New Jersey and Nevada issued injunctions blocking enforcement actions against the company, while a Maryland judge rejected Kalshi’s request for similar relief. Appeals are pending in multiple jurisdictions. Additional cases are active in Massachusetts, New York, and Ohio. Regulators in Arizona, Illinois, and Montana have issued cease-and-desist letters. Thirty-four state attorneys general have backed New Jersey’s position in its case against the company.

Other platforms offering event-based contracts face similar scrutiny. Crypto.com withdrew from Nevada amid litigation with state regulators. In Massachusetts, a judge ruled that Robinhood must comply with gaming enforcement actions tied to its event-trading products. The disputes highlight the lack of consensus across states on whether prediction markets are financial instruments or a form of gambling that requires gaming licensure.

 

PrizePicks Expands Into Prediction Markets Through Kalshi

The legal turbulence contrasts with rapid commercial growth in the sector. On Friday, PrizePicks — a major daily fantasy sports operator recently acquired by Allwyn for $1.6 billion — launched prediction markets in 38 states through a multi-year partnership with Kalshi.

The product is offered through Performance Predictions II, a federally registered Futures Commission Merchant. The designation allows PrizePicks to offer CFTC-approved event contracts. PrizePicks CEO Mike Ybarra said the expansion reflects customer demand for new types of play and positions the company to reach users “across many states” in a growing category.

The company is also partnering with Polymarket, another prediction market operator whose U.S. rollout was delayed by the federal government shutdown earlier this year. PrizePicks plans to offer markets from multiple exchanges, covering sports, entertainment, and cultural events.

PrizePicks is not alone in broadening its portfolio. Underdog, another DFS operator, recently launched both prediction markets and an online sports betting product. Market leaders FanDuel and DraftKings are preparing to introduce event-trading platforms despite warnings from some state regulators that the offerings may jeopardize sportsbook licenses.

 

Tribal leaders warn that unchecked event-trading platforms could erode hard-won gaming rights, even as federal rules place prediction markets in a separate category.

 

A Sector at a Crossroads

Together, the court ruling and new commercial partnerships show an industry growing faster than regulatory consistency can keep pace. Kalshi’s legal position — rooted in federal commodity law instead of state gambling codes — continues to draw challenges from states and tribes that view prediction markets as direct competitors to regulated gaming.

With litigation underway in more than half a dozen states and major operators moving into the space, the question of whether prediction markets are financial tools or gambling products is likely to remain unsettled for some time.