Ninth Circuit Court backs Native American tribes against Kalshi

Scott Crowell's "what credibility?" lands as Ninth Circuit backs tribes on Kalshi

At some point on Wednesday afternoon, Michael Selig sat in a room at CFTC headquarters in Washington and told more than a dozen tribal leaders that he could not discuss the agency's proposed prediction market rules. The comment period had closed. The rule was filed. Selig said nothing about it. Jason Giles, executive director of the Indiana Gaming Association, walked out and described being at a loss to explain what legal constraint could possibly apply.

That silence is now the policy. And the courts are filling the vacuum Selig left.

The Ninth Circuit's unanimous ruling this week in favor of the Blue Lake Rancheria Indians and the Chicken Ranch Rancheria of Me-Wuk Indians is the second time in less than a month that a federal appeals court has handed Kalshi a significant defeat in California. Judge Margaret McKeown, writing for the panel, found that each Kalshi sports-event contract is "an act of placing a bet or wager" — the same language she used previously, now applied to the specific question of tribal lands under IGRA. The lower court had sided with Kalshi's argument that its products were federally regulated derivatives under the Commodity Exchange Act, placing them beyond state and tribal reach. McKeown reversed that in 38 pages.

The case returns to the district court to resolve remaining claims, meaning no immediate shutdown of Kalshi's California operations. But the appellate record is accumulating in one direction, and Crowell's assessment on the Indiana Gaming Association's webinar was not hyperbolic: the CFTC's preemption theory, the argument that federal derivatives regulation simply overrides tribal sovereignty and state gambling law, has now lost at the circuit level more than once.

Crowell went further. He argued that Selig had told Congress he would let the courts resolve the sports betting question, then directed CFTC legal staff to file amicus briefs in Ninth Circuit litigation and sue states attempting to enforce their own laws. "There is no commission," Crowell said, because Selig is the sole commissioner. A single appointee running an agency whose own legal theory is unraveling in appellate courts, refusing to discuss the rule with the people most directly affected by it.

I have seen this structure before in regulatory disputes — not in prediction markets, but in structured products — where an agency's internal confidence in a legal position decays faster than its public posture does. The tell is usually the refusal to engage with adversarial questions in the open. Selig's silence in that Washington meeting was not procedural caution. It was the silence of a position that cannot withstand examination.

Where this lands is not with the CFTC recovering authority through rulemaking. The Ninth Circuit has now treated Kalshi's contracts as gaming under IGRA twice. That is a circuit-level finding, not a district court anomaly that can be isolated. The question of whether Kalshi can operate on tribal lands in California is, for practical purposes, answered. The larger question of what CFTC rulemaking can accomplish against that appellate record is the one Selig would not discuss in the room — and the one the markets are now pricing without him.