AGA, 27 States Join California Tribal Fight in Prediction Market Appeal
California gaming tribes have gained momentum in their legal challenge against prediction market platforms operating in the state. The American Gaming Association (AGA) and a coalition of 27 states, plus the District of Columbia, have weighed in, filing amicus briefs on Jan. 16 to support the tribes’ position.
“Friend of the court” briefs are filed by groups with a strong interest in the outcome, even though they are not part of the lawsuit. They offer extra information, perspectives, and expertise to guide a court in making informed decisions.
Gaming lawyer Daniel Wallach pointed out an example of the power of this approach. He highlighted the claim that U.S. District Court Jacqueline Scott Corley overlooked specific language in the Unlawful Internet Gambling Enforcement Act when saying that the UIGEA supersedes the Indian Gaming Regulatory Act (IGRA). Corley denied the tribes’ request for a preliminary injunction against Kalshi and Robinhood from offering prediction markets in California.
In their amicus brief, the states cited language in the UIGEA that “no provision” of the act can alter, suspend, or otherwise affect the application of IGRA.
Another noteworthy inclusion in the states’ amicus brief was the observation that while betting language is absent from the Dodd-Frank Act or Commodity Exchange Act, Congress “knows well how to regulate gambling—including sports wagering. When it does so, it typically speaks in express terms.”
The decision to file amicus briefs shows that the case has national consequences. A ruling could impact regulation and state authorities outside of California.
Tribes Met with Resistance in Original Case
The Native American tribes argue that prediction markets are essentially identical to sports betting, which is Class III gaming as per IGRA. As a result, it’s allowable only on tribal lands under state-tribal compacts.
The prediction market platforms consider their products to be financial derivatives overseen by the CFTC. Therefore, they claim, state gaming laws are not relevant to their products.
The appeal in the Ninth Circuit comes off the back of a decision in November by Judge Corley in the Northern California District Court. She denied the preliminary injunction request, which would have required Kalshi and Robinhood to block users on tribal lands and to stop running an ad campaign saying that it offers nationwide sports prediction markets.
Judge Corley said that Kalshi could claim its ad campaigns showcase its opinions, rather than something factual. As opinions can’t be proven to be false, the act doesn’t relate to them.
She went on to say that UIGEA was specifically created to address online gambling that crosses jurisdictions, while IGRA is reserved for land-based tribal gaming.
An exemption in UIGEA allows transactions conducted on a CEA-regulated exchange to proceed. As Kalshi has a CFTC license and operates under the CEA, the judge determined that its contracts fall within this exemption.
Nationwide Ramifications
The tribes aren’t giving up the fight, and now has reinforcements from powerful allies.
The Ninth Circuit is where much of the action is happening in pivotal prediction market cases. Four appeals remain active, while parties in two cases recently secured stay motions.
Rulings from the Ninth Circuit could set an important precedent for how prediction markets are regulated across the U.S. With 27 states and the District of Columbia now weighing in, the case has evolved into a broader test of regulatory authority.
Gambling Insider delivers the latest industry news, in-depth features, and operator reviews that you can trust. Our team combines rigorous editorial standards with decades of specialized expertise to ensure accuracy and fairness. We are committed to delivering clear, impartial, and dependable coverage across the global gambling sector.
