On Thursday, news spread that a Kalshi lawyer had informed a federal court that the prediction exchange is now actively geofencing its products from land-based casinos that are operated by three California tribes. The admission, originally shared by Kingston Chase Consulting, LLC principal Mick Bransfield, was subsequently picked up by Bloomberg News.
Kalshi’s decision to geofence its products within three California tribal territories is an apparent reaction to a Ninth Circuit decision earlier this month that the platform’s sports contracts fall under the categorization of Class III gaming.
Kalshi’s geofencing in California now includes the tribal regions of Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria. While these regions are relatively small and sparsely populated, the three tribes operate three Indian casinos in the Golden State.
Individuals who are located on reservations or on the premises of the above-listed casinos can no longer trade sports contracts on Kalshi. The service is geoblocked, a response by Kalshi after tribes brought legal claims that the casinos were losing revenue because patrons located on the casinos’ properties were accessing prediction market apps.
Despite Kalshi’s designation as a federally regulated prediction exchange under the Commodity Futures Trading Commission (CFTC), the platform’s sports contracts are now blocked in the states of Massachusetts, Washington, Nevada, and Michigan (as well as within three tribal territories in California). By the end of the year, some legal experts are projecting that the geofencing list will grow for the country’s most prominent regulated prediction market platform.
Due to prediction markets’ “peer-to-peer” business model, a nationwide presence is necessary to ensure sufficient liquidity that makes the exchange’s bid-ask process possible. Although Kalshi’s current list of geofenced jurisdictions does not make up a significant percentage of the country’s adult population, it is still meaningful.
Additional geoblocks in states like California and New York could severely impact overall volume on the exchange, particularly as it relates to sports-contract trading. In New York alone, Kalshi is facing a $36 billion lawsuit brought by Attorney General Letitia James and Governor Kathy Hochul.
Former Kalshi account holders who are located in affected jurisdictions may not be able to access sports contracts (at the very least) until a moment in the future when (and if) the Supreme Court decides to intervene.
Industry observers are also keeping a close eye on New York’s lawsuit against Polymarket, which the state filed on Thursday, September 24th. Polymarket has already reacted by countersuing the New York Attorney General and state gaming officials and has petitioned for the case to be moved to federal court.
Loading …
