Kalshi Company won a key ruling in a California court, dismissing motions by three tribes to prohibit its gambling operations on tribal lands, laying the groundwork for the legalization of prediction markets in the United States. The court ruled that Kalshi is federally regulated by the Commodity Futures Trading Commission (CFTC), and its internet contracts are not considered illegal internet gambling, thus exempt from the Indian Gaming Regulatory Act. This ruling intensifies the national debate in the U.S. about whether prediction markets constitute gambling, while also promoting a new collaboration between Kalshi and PrizePicks.
Core of the California Court Ruling: Compliance of Prediction Markets
The Northern District Court of California dismissed the lawsuits filed by the Blue Lake Rancheria, Me-Wuk Indians of the Chicken Ranch Rancheria, and the Chukchansi Indians of the Picayune Rancheria. The court noted that Kalshi is regulated by the CFTC and falls under the Unlawful Internet Gambling Enforcement Act (UIGEA), with its contracts "not being wagers or bets under UIGEA." The ruling emphasized that Kalshi proved the legality of its activities through a self-certification process, limiting regulatory review, but the plaintiffs failed to demonstrate a likelihood of success in their claims. Although the court considered tribal sovereignty concerns, it did not support the tribes' demands based on the evidence presented.
National Legal Front: Ongoing Regulatory Challenges in Multiple States
Kalshi faces multiple lawsuits across the United States. In New Jersey and Nevada, the company obtained preliminary injunctions to prevent enforcement actions; a Maryland court dismissed Kalshi's application for a preliminary injunction. The Ho-Chunk Nation in Wisconsin also filed a lawsuit. Additionally, related lawsuits have emerged in Massachusetts, New York, Ohio, while Arizona, Illinois, and Montana issued cease and desist letters to Kalshi. Thirty-four state attorneys general support the New Jersey lawsuit, and platforms including Robinhood and Crypto.com face similar challenges.
New Industry Collaborations: PrizePicks Expands Market Reach
Kalshi has entered into a multi-year collaboration agreement with daily fantasy sports operator PrizePicks, launching its prediction market products in 38 states. PrizePicks subsidiary Performance Predictions II, as a CFTC-approved Futures Commission Merchant (FCM), offers approved prediction market contracts. The CEO of PrizePicks stated that this move meets customer demands and provides more innovative gameplay options. PrizePicks also collaborates with prediction market competitor Polymarket, integrating data from multiple exchanges. Underdog, FanDuel, and DraftKings are also preparing to launch event trading platforms, although some states warn that such businesses may affect their gambling licenses.
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