Gaming attorney and analyst Daniel Wallach (pictured, right) joined Indian Gaming Association (IGA) Conference Chair Victor Rocha (left) and Executive Director Jason Giles (center) on “The New Normal” this week to examine an increasingly complicated prediction market battle.
The webinar, titled “The New Normal: The Ninth Circuit Brings IGRA Into the Prediction Market Fight,” focused on what a recent appellate ruling means for Kalshi, tribal sovereignty and federal litigation. The three also examined whether conflicting court decisions are moving the industry toward an eventual Supreme Court showdown.
For prediction market operators, the discussion underscored a growing problem.
What began largely as a dispute between federal commodities law and state gambling regulation has expanded into Indian gaming law. Tribes now have a clearer legal path to challenge sports event contracts offered on their lands.
That does not mean Kalshi or its competitors face immediate nationwide restrictions. It means another group of government bodies can potentially bring cases independently of state regulators.
Wallach’s message to tribes was direct: “Don’t wait for a Supreme Court decision,” he said.
IGRA gives tribes a different legal route
Much of the webinar centered on the Ninth Circuit’s recent decision involving Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians, which have challenged sports event contracts offered through Kalshi and Robinhood.
Their case raised an issue different from the state lawsuits already moving through federal courts. States have generally argued that sports event contracts violate gambling laws and licensing requirements. However, the tribal cases rely on the Indian Gaming Regulatory Act (IGRA), which gives tribes regulatory authority over gaming conducted on Indian lands. That creates a separate legal framework from the one states are using.
Wallach argued the Ninth Circuit decision gives tribes a practical route to seek injunctions against prediction market companies whose sports contracts are available on tribal lands.
He encouraged tribes to review their gaming ordinances, compacts and enforcement provisions. Those documents, he said, could determine how effectively tribes use the ruling.
Wallach specifically discussed possible actions involving Kalshi, Robinhood, Polymarket and Coinbase. This represents a meaningful change in the tribes’ role. Tribal groups had already participated in prediction market cases through amicus briefs. The Ninth Circuit decision could now move some tribes from supporting roles into direct litigation.
Rocha and Giles repeatedly returned to the practical question of what tribal governments should do while broader federal cases remain unresolved. Wallach’s answer was to begin examining those legal options now.
Tribal injunctions would have limits
That new litigation route, however, would not necessarily give tribes the power to remove prediction markets from an entire state. A tribe could obtain an injunction covering gaming activity on its lands, and operators could respond by geofencing those areas.
That would restrict access from tribal territory while leaving the platform available elsewhere. Wallach acknowledged that limitation. Even numerous tribal injunctions across California would not necessarily force Kalshi out of the state.
That distinction is important for executives evaluating the commercial risk. While tribal challenges based on IGRA could create operational complications, litigation costs and fragmented access, they would not automatically create statewide prohibition.
Wallach therefore turned to another possible enforcement avenue in California. He mentioned that certain city and county officials can bring actions under state law. He suggested tribal governments could explore those relationships if statewide authorities do not act.
That possibility matters because California represents one of the industry’s most valuable unresolved markets. Legal online sports betting remains unavailable there, yet prediction markets have been able to offer sports contracts without obtaining the type of state license required of sportsbooks elsewhere.
The question is whether that access can survive if courts continue recognizing state and tribal enforcement powers.
Ninth Circuit becomes central battleground
That question extends well beyond tribal lands. The recent IGRA ruling followed another important Ninth Circuit decision involving Nevada and the industry’s broader federal-preemption argument.
That case concerned whether federal commodities law prevents Nevada from enforcing its gambling laws against sports event contracts. The court rejected important parts of the industry’s position. That put the Ninth Circuit at odds with the Third Circuit, which previously sided with Kalshi at the preliminary injunction stage in New Jersey.
The disagreement has become central to the sector’s legal future. Prediction market operators argue that contracts listed on federally regulated derivatives exchanges fall under federal jurisdiction. States argue that calling a sports wager an event contract does not strip them of their traditional authority over gambling.
The two appellate courts have reached materially different conclusions. Wallach said that split could eventually draw Supreme Court review, something New Jersey has already requested.
But he stressed that the path there remains complicated. Existing cases are still developing. Some appellate decisions remain tied to related proceedings, while other federal circuits may have opportunities to weigh in first.
The Supreme Court also has discretion over which cases it accepts. That means the industry could spend considerable time operating under conflicting legal interpretations.
Wallach sees a strategic battle over which case reaches Washington
The uncertainty prompted Giles to ask whether prediction market companies benefit from extending the litigation. Wallach said they do. His argument centered on how competing cases might reach the Supreme Court.
Wallach believes Kalshi and other operators would benefit if the justices considered opposing appellate decisions together. A review focused solely on the Third Circuit could leave that ruling more exposed, he argued.
Wallach repeatedly cited Murphy v. NCAA, the 2018 Supreme Court case that struck down PASPA. His view is that Murphy reinforces state authority over sports gambling where Congress has not created a comprehensive federal regime.
Whether the Supreme Court would apply Murphy that way to prediction markets remains unresolved.
Wallach’s argument represents one side of that legal dispute. He also questioned whether current Ninth Circuit cases provide the cleanest vehicle for immediate Supreme Court review.
Some rulings involving Robinhood and Crypto.com relied heavily on reasoning developed in related Kalshi litigation. Other questions, including election contracts, raise different issues. For Wallach, that makes the sequence of cases important. It also explains why the webinar kept returning to timing.
Every additional ruling can strengthen one side’s body of precedent before the Supreme Court decides whether to intervene.
Sports trading makes the stakes much larger
The legal fight carries unusual commercial weight because sports has become central to prediction market activity. Kalshi’s nationwide sports strategy allows customers to trade contracts in states where traditional sportsbooks face restrictions.
That difference is one of the sector’s biggest competitive advantages. It’s also the advantage most directly threatened by the state and tribal cases. If federal law completely preempts state gambling laws for sports event contracts traded on a designated contract market (DCM), prediction markets can continue pursuing a national model. If states retain enforcement authority, that model becomes harder to maintain.
Operators could face different requirements in different jurisdictions. Some states could demand gaming licenses, while others could impose minimum ages, advertising restrictions or responsible-gaming requirements. Some could also prohibit the products outright.
The result could begin looking less like one federally regulated market and more like traditional fragmented state-by-state gambling regulation. That possibility shaped much of the webinar because prediction markets are expanding commercially while those legal questions remain unresolved.
Giles argued that operators are using advertising and customer acquisition to establish themselves before courts settle the jurisdictional fight. Rocha made a similar point about their growing presence around major sporting events.
That raised a practical question for tribes and gaming interests: whether they should respond with an equally aggressive public campaign. Wallach argued that the stronger response is legal, not promotional.
“The best form of advertising is free advertising,” he said, referring to court decisions favoring states and tribes.
His point was that marketing can build recognition and customer habits. Judicial rulings, however, can determine where these companies may legally operate and under what rules.
States and tribes are getting better at the litigation
Wallach’s confidence in that legal strategy stems partly from how the cases have evolved. He argued that prediction market operators enjoyed an early advantage because the Commodity Exchange Act (CEA) was unfamiliar territory for many gaming regulators.
That advantage has narrowed. State attorneys general, tribal attorneys and judges now have more case law to work from. Later rulings have therefore become more detailed.
Wallach said legal arguments that once appeared novel are now receiving more developed judicial scrutiny. He also credited tribal groups for filing amicus briefs. Those briefs provide judges with a perspective that states cannot always supply. Indian gaming involves federal statutes, sovereignty and decades of specialized case law. That gives tribes a distinct role.
The Ninth Circuit decision strengthens that role further because tribes are no longer limited to explaining the consequences of state litigation. They can potentially bring their own cases.
Wallach said he counted 37 state victories among 43 contested rulings involving preliminary injunctions or stays at the time of the webinar. That was his own tally rather than an official court statistic. The number nevertheless reflected his broader argument. The litigation environment has become less favorable for prediction market operators than it appeared during the earliest case decisions.
That shift also raises a new question for the companies themselves: whether every operator should continue following the same legal and commercial strategy.
Novig shows how companies may prepare for different outcomes
Wallach pointed to Novig as one example of a potentially different approach. He noted that the company focuses on sports contracts and limits participation to users aged 21 and older.
Wallach suggested that structure could make a future transition toward state gaming regulation easier. That remains speculative. No court has forced Novig into that model. The company has also sued several states as part of its own litigation strategy.
Wallach described that approach as more selective than Kalshi’s.
His broader point was that prediction market companies are not necessarily planning for the same future. Some may continue fighting for broad federal exclusivity, while others could try to preserve the ability to obtain state gaming licenses if the legal environment changes.
That strategic difference could become much more important if additional courts strengthen state authority. It could also affect how operators design their products now.
Margin trading shows how quickly the market is evolving
The margin trading question surfaced when Giles raised Kalshi’s effort to introduce margin trading for certain contracts. The proposal does not apply to sports contracts.
Rocha said: “The CFTC went after mention markets, and to me, my take is that they’re trying to clean up, trying to look like some of these more gambling and esoteric ones, which look so random. They want to get away from looking like gambling products now, they want to keep it within the category of financial and fintech, and I think stuff like this makes them look clowny.”
Still, Wallach used it to illustrate how much broader event contract markets could become. “In the end, injunctive relief isn’t going to shut Kalshi down,” he said.
Prediction markets increasingly combine two identities. One is consumer-facing entertainment, particularly around sports. The other is a federally regulated financial product built around derivatives-market infrastructure. Those identities create the regulatory tension at the center of the court cases.
A state sportsbook and a DCM operate under very different rules. Prediction markets increasingly offer products that resemble the former through the regulatory structure of the latter.
Wallach argued that a broad victory for federal jurisdiction could encourage still more product expansion. That was his projection, not an established regulatory outcome, but is based on fact.
The direction of the industry’s development explains why the jurisdictional fight carries consequences beyond today’s sports markets. Operators are looking beyond simple yes-or-no political contracts.
Sports, financial events and more sophisticated trading structures are becoming increasingly important. As that product mix grows, questions about oversight and market integrity become harder to separate from the jurisdictional debate.
Market integrity is entering the legal conversation
The webinar therefore moved from product expansion into concerns about trading activity and regulatory controls.
Giles and Rocha raised recent controversy involving unusual transactions on Kalshi’s separate perpetual-futures platform. Wallach said his primary interest was how such controversies might affect litigation. Courts considering preliminary injunctions often examine public interest and potential harm.
Wallach argued that documented weaknesses in surveillance or consumer protections could therefore become useful evidence for states or tribes. He did not present every allegation involving prediction markets as proven. His point was strategic: market-integrity controversies can become part of the broader argument over which regulatory system is best equipped to supervise these products.
That matters because prediction market companies increasingly promote liquidity and trading volume as measures of success. Investors, business partners and regulators may therefore examine not only how much activity occurs, but how that activity is monitored.
For tribal gaming interests, those questions feed into a still larger debate about whether federal oversight provides protections comparable with established gaming systems.
Tribal interests are not completely aligned
Even that debate is not uniform across Indian Country. Some tribal interests have explored participation in prediction markets, while others view them as a threat to regulated gaming revenue and tribal sovereignty.
That creates an important distinction. Tribal sovereignty can support a tribe’s decision to challenge prediction market activity. It can also support another tribe’s decision to participate. Rocha and Giles recognized that tribes can make their own sovereign business decisions. Their concern centered on the long-term effect of prediction markets operating outside established tribal gaming structures.
That debate is likely to grow if prediction market companies pursue additional tribal partnerships. Individual deals could complicate the industry’s political landscape without eliminating the legal claims other tribes are making.
The same tension helps explain why Wallach repeatedly emphasized litigation rather than a single unified tribal policy response. Different tribes may choose different commercial paths.
The Ninth Circuit ruling gives those seeking enforcement a stronger legal tool.
More tribal cases could now follow
The webinar ultimately returned to the discussion of continued tribal intervention. Wallach encouraged more IGRA cases, more amicus participation and greater coordination among tribal governments. His argument was that additional rulings can matter even before the Supreme Court eventually addresses the larger dispute.
A growing body of lower-court decisions can influence how later judges understand the issue. It can also affect whether one appellate decision begins to look isolated.
“The more of these cases that get filed, I think it backs the Supreme Court into a corner a little bit,” Wallach said.
His broader theory is that repeated decisions recognizing state or tribal authority could narrow the dispute before it reaches Washington, although that outcome is far from certain.
Other courts can disagree, and the Supreme Court is not bound by the numerical weight of lower-court decisions. But the possibility explains why Wallach believes tribes should act now rather than await a final national answer.
Prediction market fight is moving into a new phase
The webinar began with a Ninth Circuit ruling and ended up describing a broader transformation of the prediction market industry’s legal environment. Operators are no longer facing only state gaming regulators; tribal governments now have a stronger argument for direct participation in the litigation and federal appellate courts are divided. More cases are moving toward higher courts.
At the same time, operators continue expanding products, advertising and distribution while the legal foundation supporting nationwide sports access remains contested. For business executives, that means prediction market strategy increasingly depends on geography, litigation and regulatory structure.
Trading volume alone no longer tells the whole story. For tribes, the Ninth Circuit ruling changes the immediate calculation.
Wallach’s advice was clear throughout the discussion: use the precedent now. Whether tribes follow that advice could determine how quickly IGRA becomes a major part of the prediction market fight.
The larger question remains unresolved. Courts still have to decide whether sports event contracts belong primarily inside the federal derivatives system or remain subject to the gambling authority traditionally exercised by states and tribes.
That dispute is no longer theoretical. It’s becoming the defining legal question for the prediction market industry’s next stage, with more at risk than many may realize.
“If the CFTC’s position and Kalshi’s position is upheld here, everything is on the table,” said Wallach. “Not only margin trading, but casino event contracts, anything and everything that has a potential economic consequence and a potential financial consequence could become an event contract.
“And this represents an existential threat not only to state gaming operations and to the entire ecosystem of state gaming regulation, but for tribes and particularly who derive a significant part of their economic self-sufficiency from gaming operations.”