California Tribes Strike Against Kalshi and Robinhood  

Three Native American tribes in California have joined forces against the rapidly growing prediction markets sector, launching a lawsuit against two of the most prominent operators of such products.

The Tribes Are Unhappy with Kalshi and Robinhood’s Presence  

The Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians have voiced their opposition to the encroachment of prediction markets, alleging that these products violate state laws. As a result, the three tribes launched a lawsuit against Kalshi and Robinhood, two of the leaders in this emerging space.

Prediction markets offer yes-no contracts on a variety of events, including sports and politics, among others. Popularized by the latest US elections, these CFTC-regulated products have quickly gained traction, expanding across the US.

Competitors from the traditional betting industry, however, were not all too happy with the emerging vertical. Unlike sportsbooks, prediction markets are regulated by the CFTC and therefore can offer their products in all 50 states. Opponents have asserted that this gives them an unfair advantage.

The Tribes Say Prediction Markets Hurt Tribal Sovereignty

In California, the three tribes behind the latest lawsuit alleged that Kalshi and Robinhood’s products constitute illegal sports betting. Filed in the US District Court for the Northern District of California, the lawsuit says that Kalshi and Robinhood’s products, which can be accessed by people residing on tribal land, have violated a variety of both federal and tribal regulations, including the Indian Gaming Regulatory Act (IGRA) and the California Constitution.

The tribes also alleged that Kalshi and Robinhood’s products violate the gaming compacts between the three tribes and the government. They argued that the two companies’ products hurt the local sports betting framework and the tribes that rely on the proceeds from sports betting. As a result, prediction markets also hurt the three nations’ tribal sovereignty, the complaint argues.

The lawsuit seeks preliminary and permanent injunctions against the two prediction market platforms.

Robinhood’s event contracts are regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner. So far, two federal courts have made initial rulings that the CFTC’s rules preempt other laws and we intend to defend ourselves against these claims

Robinhood Spokesperson

Prediction Markets Under Fire

Despite the continued pressure from both commercial and tribal operators, prediction markets have continued to flourish.

Kalshi, in particular, has faced backlash and lawsuits in multiple states but has so far refused to back down. The company has previously said that it responds to the CFTC and not to state regulators and that it would make changes to its business model only if required by the CFTC.