Tribes Urge Third Circuit to Block Kalshi’s Sports Betting Contracts

Tribes Take Aim at Kalshi’s Betting Platform

The Indian Gaming Association (IGA), National Congress of American Indians (NCAI), and several Native American tribes threw their weight behind a legal fight, filing an amicus curiae brief with the U.S. Court of Appeals for the Third Circuit.

The brief, docketed under case 25-1922, supports defendants-appellants challenging KalshiEX, LLC’s sports and event contracts, which the tribes claim are illegal gambling disguised as futures trading.

“Kalshi’s unlawful entrance into the gaming market undermines tribal sovereignty,” the brief argues. The case, stemming from a New Jersey District Court ruling, pits tribal gaming rights against federal commodities law.

Kalshi’s Contracts Spark Tribal Concerns

Kalshi, a New York-based prediction market platform, offers bets on sports, politics, and weather, classified as “event contracts” under the Commodity Futures Trading Commission (CFTC). The tribes argue these contracts, especially sports bets, are Class III gaming under the Indian Gaming Regulatory Act (IGRA), requiring tribal authorization, state approval, and tribal-state compacts on Indian lands.

Kalshi operates without such agreements, depriving tribes of revenue.  The brief warns that unchecked growth threatens tribal economies.

The tribes’ brief, penned by attorneys Scott Crowell, Joseph H. Webster, Elizabeth A. Bower, Michael Hoenig, and Bryan Newland, seeks to overturn a New Jersey District Court’s preliminary injunction favoring Kalshi. Key points include:

• Kalshi’s sports contracts are Class III gaming, illegal on tribal lands without compacts, violating IGRA.

• The Commodity Exchange Act (CEA) doesn’t preempt IGRA, and Kalshi’s contracts breach CFTC rules (17 C.F.R. § 40.11(a)(1)) banning gaming-related contracts.

• Kalshi’s bets aren’t “swaps” under CEA, as they’re speculative wagers on event outcomes, not financial instruments.

• CFTC’s self-certification rules, allowing Kalshi to launch contracts, violate the nondelegation doctrine by granting private firms unchecked power.

• Kalshi’s operations erode federal Indian policy supporting tribal sovereignty and self-sufficiency.

The tribes urge the Third Circuit to reverse the injunction, arguing Kalshi’s bets “trample” tribal rights.

Kalshi’s Defense and the CFTC’s Role

Kalshi argues its CFTC-regulated contracts are legal derivatives, not gambling. A September 2024 D.C. Circuit ruling upheld Kalshi’s election contracts, emboldening its sports bets. The CFTC, overseeing $1 trillion in derivatives, allows self-certified contracts under CEA, a process the tribes call “invalid.”

Kalshi’s New Jersey suit, filed in March 2025, won a preliminary injunction, forcing states to allow its bets. Kalshi claims IGRA doesn’t apply, as its platform operates online, not on tribal lands. The Third Circuit’s ruling will test this defense.