Legal Battle Escalates as Tribes Target Kalshi's Prediction Markets
California tribes enlist local prosecutors to challenge Kalshi under unfair competition laws
1Tribes expand legal strategy
Gaming attorney Daniel Wallach is mobilizing California tribes to recruit city and county prosecutors against Kalshi, arguing tribal litigation alone won't suffice. The move follows a Ninth Circuit ruling favoring two tribes' claim that Kalshi's sports contracts violate gaming regulations. Wallach notes tribal actions can only secure injunctions, while local enforcement could pursue damages and restitution under California's Unfair Competition Law.
2Legal precedent established
The Ninth Circuit recently ruled that Blue Lake Rancheria and Chicken Ranch Rancheria will likely prove Kalshi violates the Indian Gaming Regulatory Act. This comes after another Ninth Circuit decision supporting Nevada's ban on similar prediction-market contracts. Kalshi has lost before six judges across these proceedings and is now seeking an en banc rehearing of the tribal lands ruling.
3Enforcement mechanism
California's Unfair Competition Law enables city/county attorneys in municipalities with 750,000+ residents (including LA, SF, San Diego) to take action. Wallach cites LA's lawsuit against Stake.us as a template for targeting Kalshi. Unlike tribal actions limited to injunctions, this approach could force disgorgement of profits and financial penalties, creating stronger deterrent effects.
4California's regulatory gap
While Nevada, Washington, Maryland and Massachusetts have acted against prediction markets, California remains inactive despite AG Rob Bonta's July 2024 opinion declaring daily fantasy sports illegal. Wallach attributes this to Bonta's lack of follow-through, noting his focus on other matters like the Paramount-Warner Bros merger settlement. Tribal leaders have expressed frustration with this enforcement vacuum to Congress.
5Kalshi's appellate pressure
The company faces mounting legal challenges across multiple jurisdictions. Wallach suggests Kalshi's en banc petition aims less to reverse losses than to delay Western states from acting while the ruling remains unsettled. Tribal coalitions are coordinating appellate litigation elsewhere, creating a multi-front legal battle for the prediction-market operator.
6Strategic timing concerns
Without local intervention, tribes may wait over a year for Supreme Court action - by which time Wallach predicts companies may voluntarily exit contested markets. He compares the Ninth Circuit ruling's practical impact to Bonta's unenforced DFS opinion, suggesting immediate operational changes are unlikely absent city/county lawsuits.
7Industry-wide implications
The case could set precedents affecting Robinhood and Crypto.com's operations in California. Wallach's strategy highlights how alternative enforcement mechanisms can address regulatory gaps when state authorities decline to act. The outcome may influence how tribes pursue similar actions against other fintech platforms operating near gaming regulations.
8Legal landscape shifting
This multi-pronged legal assault signals growing resistance to prediction markets in gaming-adjacent spaces. The combination of tribal sovereignty claims, state regulatory actions, and now potential local enforcement creates unprecedented pressure on the industry. The case tests how traditional gaming laws apply to emerging fintech products and may redefine compliance boundaries.
Original article: ReadWrite — Legal Battle Escalates as Tribes Target Kalshi's Prediction Markets