TLDR
- A Ninth Circuit panel sided with two California Tribes in their case against Kalshi and Robinhood
- The court said Kalshi’s sports event contracts work like Class III gaming under federal Indian gaming law
- The case was sent back to a lower court to weigh a possible injunction
- A House committee advanced a bill to restore the full tax deduction for gambling losses
- New York reported $1.3 billion in mobile sports betting tax revenue for the fiscal year
A federal appeals court ruled against Kalshi this week in a case brought by two California Tribes. The Ninth Circuit panel found the Tribes are likely to win their argument that Kalshi’s sports contracts count as a form of regulated gaming.
The ruling marks Kalshi’s second loss before a Ninth Circuit panel in under three weeks. A separate panel ruled against the company in a related Nevada case earlier this month.
What the Court Decided
The panel rejected Kalshi’s argument that its sports event contracts are different from traditional sports bets. The judges wrote that the substance of the contracts is sports gambling, regardless of what the company calls them.
The court also turned down Kalshi’s claim that federal commodities law should override tribal gaming law. Judges said the two laws cover different issues and can exist side by side.
The panel described it as unlikely that Congress meant to undo decades of sports gambling rules built by federal, state and tribal governments. The case now returns to a lower court, which will decide whether to issue an injunction.
Gaming attorney Daniel Wallach said Kalshi has now lost before every judge across both Ninth Circuit appeals. He said the ruling could affect other pending tribal challenges to sports event contracts around the country.
Tax and Revenue Developments
Away from the courtroom, a House committee approved a tax package that would restore the full deduction for gambling losses. The bill passed by a vote of 38 to 5 and now moves to the full House.
The change would reverse a 2025 law that capped loss deductions at 90 percent of winnings. Supporters say the current rule can leave gamblers owing taxes even when they did not profit overall.
Representative Steven Horsford, who sponsored the underlying bill, said no one should pay taxes on money they never earned. The American Gaming Association also welcomed the provision.
Separately, New York’s state comptroller released a report showing mobile sports betting produced $1.3 billion in tax revenue this fiscal year. That makes it the state’s second largest source of gaming revenue after the lottery.
The report showed tax collections from mobile betting grew 78 percent since 2023. Total wagers placed through New York mobile sportsbooks have topped $91 billion since betting launched there in 2022.
The comptroller’s office also tracked prediction market activity. It found sports made up nearly 80 percent of Kalshi’s trading volume and just over half of Polymarket’s volume during the period studied.
Combined trading on prediction markets has reached more than $200 billion through July, according to the report. The office also noted a rise in calls to the state’s problem gambling helpline.
Other Regulatory Actions
Ohio’s gaming regulator confirmed it left the National Council on Problem Gambling over the group’s relationship with Kalshi. Michigan and Nevada regulators made similar moves earlier this year.
A former North Carolina A&T assistant basketball coach received a four year show cause order from the NCAA. The order followed findings that he placed thousands of dollars in bets through a bookmaker and shared parlay sheets for a commission.
In Australia, regulators fined betting operator Dabble more than $760,000 for failing to close accounts of self excluded customers. The company also sent excluded users hundreds of messages in violation of national rules.
Light & Wonder announced its SciPlay CEO will step down next month, with the company’s CFO taking over oversight of the social casino unit during the search for a replacement.
