The Ninth Circuit handed Tribal gaming an appellate victory a day after the Senate failed to advance the CLARITY Act, shifting two fronts of a prediction-market dispute that remains unresolved at the CFTC.
Tribal gaming interests secured favorable outcomes on two fronts in the sports-prediction-market fight this week in Congress and federal court.
On Tuesday, the Senate failed to advance the Digital Asset Market Clarity Act (CLARITY Act), an outcome that Tribal organizations had sought after months of pushing for explicit protections for the Indian Gaming Regulatory Act (IGRA), Tribal-state gaming compacts and Tribal gaming authority.
A day later, the Ninth Circuit ruled that two California Tribes are likely to succeed in their claim that Kalshi’s sports event contracts violate IGRA when offered on Tribal lands.
The developments came on different fronts of the broader fight over how federally regulated sports-event contracts interact with existing gaming laws and Tribal authority.
Neither settles that fight. The California case now returns to the district court, while other Tribal lawsuits and the broader dispute over the Commodity Futures Trading Commission’s (CFTC) authority continue.
Ninth Circuit Backs Tribes on IGRA
The Ninth Circuit held that Blue Lake Rancheria and Chicken Ranch Rancheria are likely to succeed on their IGRA claim against Kalshi, reversing a district court on the key legal questions.
At the center of the decision is how the court classified Kalshi’s sports contracts.
The analysis is functional,” the panel wrote. “IGRA does not ask whether the operator labels the product a bet or an event contract, or something else. It asks what the activity looks like.”
The court concluded that Kalshi’s sports event contracts constitute Class III gaming and are “located on Indian lands” when users enter the contracts from Tribal territory.
It also rejected Kalshi’s argument that the Commodity Exchange Act’s exclusive-jurisdiction provision and the Unlawful Internet Gambling Enforcement Act’s (UIGEA) treatment of certain CFTC-regulated transactions displaced the Tribes’ IGRA claim. The panel concluded that neither statute prevented the Tribes from pursuing their IGRA theory.
The ruling builds on an Aug. 28 Ninth Circuit decision issued by a different three-judge panel in Nevada’s case against Kalshi. In a footnote, that panel rejected Kalshi’s reliance on UIGEA’s carveout for certain CFTC-regulated transactions.
The ruling noted that the law expressly says its definitions do not “alter” or “limit” other federal or state laws. The court said other statutes could therefore treat wagers according to their ordinary meaning rather than UIGEA’s narrower definition.
Less than three weeks later, the Blue Lake panel echoed that reasoning in the Tribal context, concluding that UIGEA does not displace IGRA.
The Blue Lake case now heads back to the district court, where the Ninth Circuit directed the judge to consider the remaining preliminary-injunction factors.
CLARITY Vote Delivers Outcome Tribal Groups Sought
The Ninth Circuit victory came one day after Tribal organizations secured another favorable outcome in Washington. The Senate’s cloture vote on the CLARITY Act failed 49-50, short of the 60 votes needed to advance the legislation.
The Indian Gaming Association (IGA) welcomed the result.
Today, Indian Country’s voice was heard,” Chairman David Z. Bean said. “This is an important victory for Tribal sovereignty, but it is not the end of this fight.”
Tribal organizations had argued that CLARITY could expand CFTC authority without expressly preserving IGRA, Tribal-state gaming compacts and Tribal and state gaming authority. They also sought language that would prevent federally regulated prediction markets from offering sports- and casino-style contracts.
Those concerns had already surfaced publicly during an Aug. 4 Senate Indian Affairs Committee roundtable, where Tribal leaders urged lawmakers to protect IGRA and existing gaming laws and raised concerns about CLARITY’s decentralized-finance provisions.
Tribal gaming was only one of several issues surrounding the bill. The final Senate dispute also centered on unresolved ethics and divestment provisions involving federal officials’ digital-asset holdings, while other financial-sector concerns remained in play.
Still, the result delivered the immediate outcome IGA had sought: CLARITY did not advance without the additional gaming protections it had demanded.
CFTC Remains the Unresolved Front
Congress and the courts are only two fronts in a broader Tribal campaign over prediction markets. The CFTC remains a central unresolved front.
During the Senate Indian Affairs Committee roundtable, Tribal leaders challenged both the agency’s authority over sports event contracts and its approach to Tribal consultation.
So make no mistake, nothing in the legislative history of the CEA suggests that Congress ever intended the CFTC to become a backdoor regulator of gaming,” NCAI President Mark Macarro said.
That dispute carried into this week. One day before the Senate vote, leaders from 17 Tribal organizations met with CFTC Chairman Michael S. Selig. NCAI and IGA welcomed the meeting but said it fell short of the formal government-to-government consultation they had sought.
We view the CFTC’s actions as undermining the Indian Gaming Regulatory Act, as allowing illegal Class III gaming to infringe upon the sovereignty of Tribal nations, and as undermining revenue streams that are critical to Tribal government programs and services,” Oklahoma Indian Gaming Association Chairman Matthew Morgan said.
The CFTC, meanwhile, has continued to assert federal authority over event contracts. Its recent actions show that disagreement is more than rhetorical.
In July, after a Michigan court order affected previously executed Kalshi trades, the CFTC stayed an emergency rule change and ordered the exchange to fulfill the open trades, citing the CEA’s requirements for a uniform national derivatives market and impartial access. The agency invoked similar authority in August after New York sued Kalshi.
Those actions did not decide whether sports event contracts violate IGRA or state gaming laws. Instead, they highlight the unresolved regulatory divide: Tribal organizations view sports contracts on Tribal lands as gaming, subject to IGRA. At the same time, the CFTC has acted to preserve access to federally regulated event-contract markets.
Attention Turns to Active Tribal Cases
The Blue Lake ruling now lands immediately before hearings in two active Tribal cases.
The next test comes Sept. 23 in New Mexico, where four Tribes will ask a federal judge to preliminarily block Kalshi as the court also considers the company’s motion to dismiss.
A day later, the district court in Blue Lake will hold a status conference and hear the Tribes’ pending motion to amend their complaint and add another party. The preliminary-injunction dispute also returns to the lower court following the Ninth Circuit’s remand.
The Ninth Circuit’s new opinion is therefore likely to feature prominently in both proceedings, particularly in New Mexico, where the court is considering similar questions over IGRA and federally regulated sports event contracts.
Meanwhile, the Wisconsin Ho-Chunk Nation case is stayed while Kalshi and Robinhood seek Seventh Circuit review of two certified IGRA questions. The district judge had found the Nation likely to succeed on its IGRA claim and that neither the CEA nor UIGEA preempted its authority, but denied a preliminary injunction for lack of irreparable harm.
For Tribal gaming, the week produced favorable results in both Congress and the courts. Attention now turns to whether the Ninth Circuit’s reasoning gains traction in other Tribal cases.
The CFTC presents a different picture. Its recent actions in Michigan and New York have emphasized a uniform national market and access to federally regulated exchanges, and the agency has given no public indication that this week’s Senate vote or the Blue Lake ruling changed that position.
The result is a fight that has shifted in Congress and the courts without resolving the central regulatory disagreement over where federal commodities authority ends and Tribal gaming law begins.
Featured Image: Cathy via Wikimedia Commons (license)
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