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California Tribes file lawsuit against Kalshi and Robinhood for offering "illegal sports gambling"

Dan Holmes

Sports Writer

Publish Date: Jul 23, 2025

Fact checked by: Sara Jane Gamelli

Key Points

Three California tribes have filed a federal suit against Kalshi and Robinhood claiming illegal sports betting on their lands
Kalshi and Robinhood are at the forefront of prediction markets that offer sports event contracts
Several states are looking at sports event contracts for possible regulatory action and governance

This article was originally written before California state laws changed and a legislation banning sweepstakes based platforms has been introduced as of January 1st 2026. Some information in this article that refers to sweepstakes casinos may no longer be relevant.

Three California tribal nations are teaming up to sue Kalshi and Robinhood Markets for offering "illegal sports gambling" via its sports event contracts market.

Three prominent California tribes: Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians, have filed a lawsuit in federal court in California's northern district.

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The suit alleges Kalshi and Robinhood are in violation of the Indian Gaming Regulatory Act. According to the plaintiffs, the two prediction markets offer sports betting on the tribal lands.

Each of the tribal nations are federally recognized and have been granted gaming rights in California based on that status and compacts with the state. All three have been active in the issues of gaming in the state. In the past, these three tribal nations opposed commercial sports betting in the state. They are also part of a coalition aligned in favor of a bill that would ban sweepstakes and social casinos in the Golden State.

What is Kalshi and Robinhood?

Kalshi and Robinhood are the vanguard of the prediction market industry, which offers customers an opportunity to make trades based on the outcomes of events, including sports. In some states, regulators are concerned that such a product is constituting a sports betting market.

The federal government seems to be keen on predictions markets. Last month, the Commodity Futures Trading Commission reaffirmed its approval of Kalshi and other companies to provide prediction markets as a designated contract market provider. The Trump administration has not opposed the prediction markets being proposed by Robinhood, Kalshi, and others.

Recently, it's been reported that DraftKings, a leading sportsbook, online casino, and daily fantasy sports provider, was interested in purchasing Railbird Exchange, a predictions market seeking to expand in the United States.

What are sports event contracts?

Robinhood is known for democratizing stock trading. Through its partnership with Kalshi, a regulated exchange, Robinhood offers these "event contracts." These are financial instruments that allow users to trade on the probability of a specific event happening. The structure is a simple "yes" or "no" proposition. For example, a contract might ask if a certain team will win a championship.

The price of sports event contracts fluctuates between $0.01 and $0.99, with the price reflecting the market's perceived probability of the event's outcome. If a trader buys a "yes" contract at $0.60, they are essentially betting on a 60% chance of that outcome. If they are correct, the contract settles at $1.00, yielding a profit. If they are wrong, the contract expires worthless.

According to the suit filed by Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians, Robinhood is offering sports event contracts to consumers in California, including on tribal lands. That activity, according to the tribes, is illegal sports gambling.

Allegedly, Robinhood has offered markets on major events like NCAA basketball tournaments, the NBA Finals, and more. This allows users to trade on game and tournament outcomes. This positions Robinhood as a key player in the growing convergence of financial markets and sports analytics, offering a new way for fans and traders to capitalize on their knowledge and predictions.

The nature of these sports-related contracts has drawn scrutiny. Critics, including some state regulators and tribal gaming commissions, argue that these event contracts are a form of unregulated sports betting. Some observers claim that these products are essentially wagers on sporting events, operating outside the established legal frameworks for sports gambling.

Robinhood and Kalshi maintain that their offerings are legitimate, CFTC-regulated financial instruments, not bets. They distinguish their products by highlighting that users are trading against each other in a market, rather than betting against "the house" as in traditional sportsbooks. Despite the legal and regulatory hurdles, Robinhood's bold step into event contracts has undeniably placed it on the leading edge of this emerging market, blurring the lines between financial speculation and sports engagement.

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