- As Polymarket makes a high-profile return to the U.S. market with full regulatory approval, Kalshi is now under fire in California federal court.
- These two developments underscore the fates of America’s top prediction market platforms.
SACRAMENTO, Calif. – Three federally recognized California tribes – Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria – filed a lawsuit Tuesday against Kalshi and its distribution partner Robinhood. The suit accuses the companies of offering California sports betting within tribal jurisdictions that is illegal by violating the Indian Gaming Regulatory Act (IGRA), the California Constitution, and tribal-state gaming compacts.
The complaint also levels civil racketeering (RICO) allegations, claiming Kalshi is part of a broader “gaming racket.”
Kalshi, which has shifted heavily into legal sports betting in 2025, maintains it is a contract market regulated by the CFTC, not a sportsbook. Still, this federal lawsuit marks a significant escalation in the legal battle against event-based trading.
While earlier challenges from state regulators failed to halt operations in Maryland, Nevada, and New Jersey, the tribal case could prove more potent, given the unique sovereign status and legal rights of tribal nations under IGRA.
What’s Going On With Polymarket?
Kalshi’s crypto-native rival has emerged from years of legal limbo with a new path forward. This week, the company announced its $112 million acquisition of QCX, a fully licensed CFTC-regulated exchange and clearinghouse. The deal grants Polymarket a legal on-ramp to serve American customers, marking its formal return to the U.S. market after a 2022 CFTC enforcement action and a high-profile FBI raid on its CEO.
Federal probes by the DOJ and CFTC were closed last week with no charges filed, clearing the regulatory overhang just as Polymarket prepares to re-launch its services domestically.
The tribal lawsuit against Kalshi and the regulatory breakthrough for Polymarket reveal a core divide in the future of prediction markets. While Kalshi doubles down on its legal classification as a futures exchange, Polymarket has chosen a more conservative approach by acquiring a regulated entity to stay within the letter of U.S. law.
