Tribes Hit Kalshi and Robinhood with RICO Lawsuit Over “Illegal” Betting Operations
Three federally recognized tribes in California have filed a federal lawsuit against Kalshi and Robinhood, accusing the financial platforms of running an illegal sports betting racket. The suit alleges the companies’ “event contracts” violate federal Indian gaming law, tribal sovereignty, and racketeering statutes.
Sovereignty and IGRA Violations at Core of Complaint
The lawsuit, filed by the Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians, argues that Kalshi’s products are illegal sports wagers.
The tribes claim the online availability of these contracts means they are being offered on their tribal lands. This directly violates the Indian Gaming Regulatory Act (IGRA) and their tribal-state gaming compacts with California.
The tribes’ legal documents state these agreements “prohibit sports gambling on the Tribes’ reservations or ‘Indian Lands’, as defined by the IGRA.”
Since sports betting is not legal in California, the tribes cannot offer it, and they argue Kalshi is illegally operating where they have exclusive jurisdiction.
The suit claims Kalshi has “not implemented any mechanism, such as geo-location and geo-fencing, that would prevent any person or entity from engaging in sports betting using the Kalshi app on the Tribes’ Indian lands.”
Racketeering and Deceptive Marketing Allegations
The tribes are suing under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a law typically used to prosecute organized crime.
The lawsuit alleges Kalshi and Robinhood formed a “Gaming Racket” to market illegal gambling products. The complaint claims this enterprise engaged in wire fraud through the “systematic misrepresentation of unlawful gaming contracts as legitimate commodity contracts.”
The suit also points to Kalshi’s aggressive marketing. The company allegedly promoted itself as the “The First Nationwide Legal Sports Betting Platform” and claimed to offer “Sports Betting Legal in all 50 States on Kalshi.”
The tribes argue these statements are false and misleading, designed to deceive consumers into believing the platform was a federally endorsed gambling site. This activity, they claim, has a direct financial impact by drawing “business away from the Tribes’ casinos by allowing patrons to participate in class III gaming from their homes.”
An Offensive Legal Strategy
Top gaming attorney Daniel Wallach described the lawsuit as a “winning” strategy and a shift from defense to offense for the tribes. He noted the tribes’ move “blunted Kashi’s hitherto successful tactics of ‘controlling the narrative’ by striking first, ‘playing offence, not defence’.”
Wallach highlighted that California has a “strict anti-gambling stance on sports betting. And it’s one enshrined in the state’s constitution.” This legal foundation makes the tribes’ case particularly strong. For any sports betting to become legal in the state, even for tribal operators, it would require a constitutional amendment passed by public vote.
Circumventing Safeguards
The lawsuit also accuses the companies of bypassing critical consumer protections. The tribes argue Kalshi and Robinhood’s operations lack the licensing, age verification, and responsible gaming measures that are standard in the regulated industry. This allows for “widespread, unregulated sports betting, including by underage users, through digital platforms.”
The complaint argues this lack of oversight creates significant risks, including problem gambling and sports corruption. It also directly interferes with the tribes’ ability to govern themselves. The suit claims the “proliferation of unregulated sports gambling through mobile apps is placing unique pressure on tribal sovereignty” and disrupts their capacity to enforce their own laws.
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