California tribal trio file joint lawsuit against Kalshi and Robinhood
Three tribes have set their sights on the prediction markets platforms amid concerns over unauthorized sports betting taking place on reservations
Three California tribes have launched legal action against Kalshi and Robinhood over allegations of unauthorized sports betting.
The Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians have collaborated to file a joint lawsuit against the duo.
All three tribes harbor concerns because both Kalshi’s and Robinhood’s sports event contracts are being traded on the tribes’ respective reservations, which would directly violate several federal and tribal regulations.
The complaint outlines that by rolling out contracts which can be traded by users aged 18 and over based on the predicted outcomes of games, Kalshi and Robinhood are overseeing an unregulated sports betting product.
The plaintiffs in this dispute have argued that by enabling users to trade sports event contracts on their respective reservations, Kalshi and Robinhood have breached the Indian Gaming Regulatory Act (IGRA), as well as the California Constitution.
As per IGRA, tribes possess the power to both operate and regulate gaming conducted on their respective reservations, as long as all operations adhere to rules set out with the relevant tribal-state compact authorized by the US Department of the Interior.
As per the tribal-state compacts, the event contracts would infringe tribal sovereignty and undermine existing tribal regulatory frameworks, the lawsuit claims.
The lawsuit seeks a permanent injunction to prevent Kalshi and Robinhood from continuing what the plaintiffs have argued is illegal gambling, by offering the sports event contracts within tribal reservations.
As part of its argument against the defendants, the three tribes have also noted that due to the lack of regulation within the sports event contracts sector, the product also presents a risk of increasing gambling-related harm.
Previously, in response to similar legal battles, Kalshi has outlined that it is regulated at federal level by the Commodity Futures Trading Commission (CFTC).
This lawsuit details how the plaintiffs believe that sports event contracts circumvent the kind of regulation that traditional online sportsbooks are subject to in various states across the US, such as age verification, licensing, and consumer protections.
Within the complaint, the plaintiffs acknowledge the contrast between Kalshi being regulated at federal level by the CFTC and the restrictions imposed by the IGRA and more general tribal law.
As per IGRA provisions, even if the wider federal framework deems an activity legal, compliance with the terms of tribal compacts is required, in this instance prohibiting any unauthorized gaming activity on tribe-owned land.
Kalshi had no comment to make on the matter when approached by EGR North America.
A Robinhood spokesperson added: “Robinhood’s event contracts are regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner.
“So far, two federal courts have made initial rulings that the CFTC’s rules preempt other laws and we intend to defend ourselves against these claims.”