California Tribes Seek Injunction Against Kalshi Following NFL Opener

Prediction platform Kalshi reported $27 million in trading volume on contracts tied to the Philadelphia Eagles' victory over the Dallas Cowboys in the NFL opener. At the same time, three Native Indian tribes in California have asked a federal judge to bar the platform from offering such contracts on tribal lands within the state. 

If approved, the ruling would force Kalshi to geofence users in specific regions. In separate litigation in Maryland, the company has previously argued that this would be excessively costly.

The tribes' lawsuit centers on the claim that they hold exclusive rights to operate gaming in California. They are also looking for a judgment that would prevent Kalshi from advertising that its contracts are legal in all 50 states, and describe such advertising as false and misleading.

The Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians are among the plaintiffs. The lawsuit, which was initiated in July, also concerns Robinhood, which facilitates trading on the Kalshi exchange, but the most recent filing targeted Kalshi directly.

The legal dispute highlights a broader controversy surrounding prediction markets that closely resemble sports betting. Kalshi contends that its markets differ because participants trade contracts against one another rather than wagering against a house or bookmaker. 

The tribes oppose that view, arguing the activity clearly falls within the scope of unregulated gambling. A tribal victory would support the position that Kalshi must adhere to the Indian Gaming Regulatory Act and other gaming laws.

New competitors enter prediction market space

While Kalshi faces mounting legal challenges, rival platforms are advancing their own expansion plans. Last month, The Clearing Company, a prediction market founded by former Polymarket and Kalshi staff, raised $15 million in seed funding. 

Union Square Ventures led the round with participation from Haun Ventures, Variant, Coinbase Ventures and several others. The startup's goal was building a permissionless, on-chain, regulated prediction market.

Investors in The Clearing Company's seed round also included Compound, Rubik, Earl Grey, Cursor Capital, and several individual backers.

The Clearing Company enters a field already marked by strong activity. Polymarket has established itself as a market leader, reporting 286,000 active traders in July, its highest level since April. 

Former Polymarket and Kalshi executive Toni Gemayel is leading The Clearing Company as its CEO. Other former Polymarket employees are also part of the team.

Polymarket itself has seen new investment, with Donald Trump Jr. joining as both investor and advisory board member. He had earlier taken an advisory role with Kalshi. Meanwhile, Kalshi has recruited crypto influencer John Wang as head of crypto to bolster its expansion.