Three Native American tribes have launched a lawsuit against Kalshi and Robinhood over what it claims is illegal sports gambling. The prediction market, Kalshi and investment app turned financial Swiss Army Knife, Robinhood, have been providing what can be seen as a loophole in that they offer prediction markets on sports.

Rather than straight up offering a sportsbook, these prediction markets provide particularly worded options to bet on. This skirts around the fact that California currently doesn’t allow for sports betting, with tribes not pushing to put it back on the ballot until after 2026.

Now, Robinhood and Kalshi are under the firing line. In recent months, Robinhood partnered with Kalshi to provide prediction markets on the app. Originally, Robinhood started as an investment app, but now offers prediction markets and cryptocurrency services on top of this.

The tribes involved, the Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians, are claiming that these apps break the IGRA, or Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq.. At its core, the IGRA protects gaming for tribes, as it’s seen as a source of revenue, which in turn leads to other economic benefits.

The suit is to prevent gambling on tribal land, rather than the entirety of California. As the apps are effectively available everywhere and can be accessed at any time, it’s a large-reaching area that they’re trying to tackle.

If successful, this will put a potential end to Kalshi and Robinhood’s sports betting. It’ll also put an injunction on Kalshi, as it’s currently perceived as unregulated gambling, something that the tribes are serious about.

California tribes won’t return to sportsbooks until 2028

In 2022, FanDuel and DraftKings led Prop 27, and tribes ran Prop 26. However, neither succeeded, with the tribes pushing back significantly on the two corporate entities. Reportedly, tribes spent $200 million on a campaign to ensure that Prop 27 didn’t pass. Prop 26 would have allowed for sports gambling on tribal land.

In recent months, the companies have been trying to smooth over the relationship. In a report from the San Jose Inside, tribes are now not considering returning to the sportsbook idea until 2028.

Feature image: Pix4free, Robinhood, Kalshi

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