Kalshi has faced its second setback from the Ninth Circuit in under three weeks, as the court ruled in favor of two California Tribes regarding their challenge against Kalshi and Robinhood. The court has sent their request for a preliminary injunction back to the district court.
In a related development, a House committee has moved forward with legislation aimed at reinstating the full federal deduction for gambling losses. Meanwhile, New York continues to see growth in mobile sports betting, alongside a rise in calls related to problem gambling. New enforcement actions have also been reported in college sports and Australia.
The significant news from the Ninth Circuit involves a three-judge panel that ruled in favor of the Tribes, partially overturning a lower court's decision that denied a preliminary injunction. The panel determined that Kalshi's sports-event contracts likely qualify as Class III gaming under the Indian Gaming Regulatory Act (IGRA) when conducted on Tribal lands. The court dismissed Kalshi's attempts to differentiate between event contracts and standard sports wagers, referencing a recent ruling from the Ninth Circuit in Nevada.
The court stated, “The essence of the sports event contracts available on Kalshi’s DCM is sports gambling, regardless of whether Kalshi labels them as swaps.” It further noted that the only difference lies in Kalshi's terminology.
Additionally, the panel rejected Kalshi's claim that the Commodity Exchange Act's exclusive jurisdiction provision supersedes IGRA, asserting that the two statutes address different issues. The court found it “implausible” that Congress intended to dismantle the extensive sports gambling regulations established over decades by federal, state, and tribal authorities.
This ruling marks Kalshi's second defeat in less than three weeks, following another unfavorable decision from a different Ninth Circuit panel in Nevada. Although this ruling does not immediately enforce an injunction, the case has been sent back for further consideration.
Gaming attorney Daniel Wallach pointed out that Kalshi has now lost six times across two appeals in the Ninth Circuit, which significantly reduces its chances for an en banc rehearing in the Nevada case. Wallach also indicated that this ruling could have implications for ongoing and future Tribal challenges related to sports event contracts.
In a separate but related matter, a congressional initiative to restore the full federal tax deduction for gambling losses has made significant progress. The House Ways and Means Committee approved a broader tax package with a vote of 38-5, which includes provisions from Rep. Steven Horsford’s FULL HOUSE Act. This legislation aims to allow gamblers to deduct losses up to 100% of their winnings, reversing a 2025 change that limited this deduction to 90%. The new law could leave gamblers with taxable income even when they do not make a profit overall.
Rep. Horsford emphasized, “No one should pay taxes on money they never earned,” in a press release. Nevada Rep. Dina Titus, a key advocate for reversing the previous change, expressed her support for the inclusion of this provision in the package. Bill Miller, President of the American Gaming Association, also expressed gratitude for this important step.
Lastly, New York State Comptroller Thomas DiNapoli released a report titled “Sports Wagering in New York,” revealing that mobile sports betting has generated $1.3 billion in tax revenue for the state during the fiscal year 2026.