Most exchanges that list event contracts work from a map of the United States with two layers on it. One is federal, where the Commodity Futures Trading Commission sits. The other is state, where fifty attorneys general do. Almost every compliance decision the category has made since 2024 answers a question asked on one of those two layers.
On 16 September 2026 the United States Court of Appeals for the Ninth Circuit published an opinion that put a third layer on the map. It is not measured in states. It is measured in parcels, and what it asks is not where a company is licensed but where the buyer was standing when the order went in. We are in favour of these markets existing. We also think a category that cannot answer a question about the ground under its user's feet is not ready for the regulator that comes next.
Two sovereigns on the map, and a third one in a published opinion
The case is Blue Lake Rancheria v. Kalshi, Inc., No. 25-7504, decided for publication by a panel of Chief Judge Mary H. Murguia and Circuit Judges M. Margaret McKeown and Richard A. Paez, with the opinion written by Judge McKeown. The plaintiffs are two federally recognised tribes, the Blue Lake Rancheria and the Chicken Ranch Rancheria of Me-Wuk Indians. The defendants are Kalshi, Inc., KalshiEX, LLC and two Robinhood entities.
The tribes sued under the Indian Gaming Regulatory Act and the Lanham Act. The panel affirmed in part, reversed in part and remanded. On the Lanham Act they lost: the advertisement they challenged, the claim that sports betting is legal in all fifty states on Kalshi, was held to be an unactionable statement of opinion about legality. On the Indian Gaming Regulatory Act they won the part that matters.
Be precise about how far that goes. The panel decided one of the four preliminary injunction factors and sent the case back to District Judge Jacqueline Scott Corley in the Northern District of California for the other three, so no injunction issues from the opinion itself. What issues is a published holding an exchange has to design against.
Class III gaming became a question about where the buyer was standing
Under 25 U.S.C. section 2703(8), class III gaming is the residual category: every form of gaming that is neither class I nor class II, which is where casino games and wagering on sport land. It is lawful on Indian lands only under three conditions set out in 25 U.S.C. section 2710(d)(1): authorisation by an ordinance of the host tribe, a state that permits that gaming, and conformance with a Tribal-State compact or with procedures prescribed by the Secretary of the Interior.
The panel held that Kalshi's sports event contracts are class III gaming activities for the purposes of the cause of action in section 2710(d)(7)(A)(ii). Then it held the part that changes the engineering. The contracts are located on Indian lands, the court wrote, when a user enters into the contract from tribal territory. Headquarters and server location do not decide it. The panel got there by running its own 2018 decision in California v. Iipay Nation of Santa Ysabel in reverse, and by leaning on the Supreme Court in Michigan v. Bay Mills Indian Community, where class III gaming activity is what goes on in a casino rather than the off-site operation of the games.
Read that as a product requirement and it asks for something the current map cannot give. Indian lands are parcels, interleaved with land that is not, and their boundaries follow neither county nor state lines. A geofence assembled from state polygons, which is what state litigation taught the category to build, cannot answer the question the Ninth Circuit just made decisive.
Exclusive turned out to mean exclusive of other agencies
Kalshi's answer was the one the category uses everywhere else: the contracts trade on a designated contract market, the Commodity Exchange Act gives the Commission exclusive jurisdiction under section 2(a)(1)(A), and that ends it. The panel read the word narrowly. Its best reading of exclusive is jurisdiction exclusive of all others and not just the Securities and Exchange Commission, but not exclusive of the federal courts or of all federal law.
The structural argument built on that deserves an operator's attention, because the statute is selective about what it displaces. Section 16(e)(2) of the Commodity Exchange Act expressly supersedes state or local law that prohibits or regulates gaming, and the neighbouring paragraph expressly declines to supersede any federal or state statute for transactions not on a registered entity. Congress spoke clearly about state gaming law and said nothing about displacing other federal statutes, and under Credit Suisse Securities (USA) LLC v. Billing one federal statute yields to another only where the two are clearly incompatible. So the panel harmonised them: the Commodity Exchange Act decides when a contract may trade on an exchange, and the Indian Gaming Regulatory Act decides whether the same transaction, offered on Indian lands, meets its own conditions. The carve-out in Title 31, section 5362(1)(E)(ii) did not rescue the argument either, because section 5365(b)(3) of the same title disavows any intent to affect that statute in civil proceedings about Indian lands.
The opinion also lays out the split across three circuits and two district courts, and then notes that none of those cases involves event contracts on tribal lands. We have argued that the express preemption clause points away from the exchange, and that reading survives this opinion intact. It just turns out not to have been the only question.
The rulemaking that touches this layer spends a section and a half on it
The Commission's position was already on record, where nobody reads it. Section F of the Commission's June 2026 proposal to rewrite Rule 40.11, published on 12 June 2026 at 91 FR 35806, is headed Indian Tribal Consultation and sits at the very end, among the related matters, next to the discussion of Executive Order 12866.
The Commission states there that it is not subject to Executive Order 13175, and that non-subject agencies are encouraged to comply with it. That is accurate, and the reason is structural. Executive Order 13175, issued on 6 November 2000 at 65 FR 67249, defines the agencies it binds in section 1(c) by excluding independent regulatory agencies as defined in 44 U.S.C. section 3502(5), a list of named agencies on which the Commodity Futures Trading Commission appears second. Section 8 of the order is a single sentence encouraging such agencies to comply, and section 10 states that the order creates no right, benefit or trust responsibility enforceable at law. The procedural claim this layer has against this agency rests on those two sentences.
What the Commission wrote next belongs in front of a listing committee. It accepts that the Indian Gaming Regulatory Act, codified at 25 U.S.C. section 2701, establishes a comprehensive federal framework for gaming on Indian lands, that the National Indian Gaming Commission administers it, that Tribal-State compacts under section 11(d) govern class III gaming, and that gaming revenue matters to tribal governments. Then comes one word. However, the Commission writes, the proposal involves event contracts traded as swaps or futures contracts, which are subject to its exclusive jurisdiction. Three months later a circuit court read that same phrase and did not reach the same conclusion.
Two tribal submissions appear by name, in footnotes. The Commission records the Pechenga Band of Indians, at page 7 of a letter dated 29 April 2026, as arguing that the statute already bars listing contracts involving the enumerated activities so Rule 40.11 should not be amended, and the Tohono O'odham Nation, at page 15 of a letter dated 30 April 2026, as urging it to consider Executive Order 13175 in any prediction markets rulemaking. Those are the Commission's characterisations in its footnotes 162 and 313, not the letters themselves. An earlier piece of ours counted who else filed.
Three answers arrived in three days
The week of 16 September produced three federal documents about the same layer, and they do not point the same way. On 16 September the Ninth Circuit held that the Commodity Exchange Act does not displace the Indian Gaming Regulatory Act on Indian lands. On 17 September the Market Participants Division issued CFTC Staff Letter 26-25, signed by Division Director DJ Hennes, extending to a class it calls passive software providers the position it had first given a single software developer in Staff Letter 26-09 on 17 March 2026. Subject to ten conditions, and until a Commission rulemaking or guidance addresses the point, the division will not recommend enforcement against such a provider for failing to register as an introducing broker under section 4d(g) of the Act, or against its personnel for failing to register as associated persons under section 4k(1).
On 18 September the Tunica-Biloxi Tribe of Louisiana announced its own launch of a prediction market app, calling SaltTrade Derivatives the first tribal nation prediction market app and stating that it will not be registered with the Commission, in reliance on conditional no-action relief from Commission staff. Chairman Marshall Pierite framed it as the kind of opportunity where tribes are owners rather than participants.
A sovereign consents to jurisdiction in a footnote
The conditions in Letter 26-25 matter to anyone drafting a distribution agreement. Condition 7 requires the provider and each registered exchange or broker it works with to sign an undertaking accepting joint and several liability for violations in the covered activities, and to consent to the Commission's jurisdiction to investigate and bring enforcement. Condition 10 requires a filed notice consenting to that jurisdiction again.
Footnote 22 then addresses the case the category had not planned for. Some providers, it says, may be affiliated with a state or tribal government and so potentially protected by sovereign immunity, and a provider must therefore include a waiver of sovereign immunity, limited or otherwise, if one is necessary to make that consent enforceable.
Set the two documents side by side. In one week, one federal instrument held that the Commission's exclusive jurisdiction does not reach conduct on Indian lands, and another asked a tribally owned distributor to waive immunity so the Commission can reach it. In law they answer different questions and there is no contradiction. In a boardroom they are one question, about what a sovereign gives up to distribute this product.
The third layer does not speak with one voice
Tribal Business News, reporting on 19 September 2026 under the byline of Chez Oxendine, recorded the reaction. The California Nations Indian Gaming Association called the Tunica-Biloxi decision profoundly disappointing and argued that a business deal does not change the law. Indian Gaming Association Chairman David Bean said the Commission's no-action position violates the Commodity Exchange Act and the Commission's own regulations. Kalshi chief executive Tarek Mansour said Indian Country should have more paths to economic self-determination rather than fewer. Chairman Pierite answered that tribes see these markets differently depending on their own position in gaming.
The opinion's counsel listing shows the same spread. Amici supporting the tribes included the Indian Gaming Association, the National Congress of American Indians, six state and regional Indian gaming associations and fifteen federally recognised tribes. The American Gaming Association filed on the other side, and so did a group of state attorneys general.
The error was never failing to pick a side, which is not ours to pick. It was treating a layer that holds a litigant, a commercial partner and a trade association disputing a federal staff letter as one position that could be handled once.
What a parcel level map has to be able to do
Directive 05 of our commitment says standards are set against the jurisdiction that regulates next, not only the one that has not yet. None of the following requires waiting for the remand.
- Resolve location at parcel level, and name the source. A state list cannot express Indian lands. The geofence needs a boundary dataset, a refresh interval and a measured false negative rate, and somebody has to be able to describe all three under oath.
- Write down, per contract, which of the three conditions would have to be met. Section 2710(d)(1) asks for a tribal ordinance, a permitting state and compact conformance. For any listed contract that answer should exist on paper before a buyer is standing there.
- Know which tribe the buyer is on, and your relationship with it. After September 2026 the honest answers include plaintiff, commercial counterparty and neither, and they carry different consequences at the same coordinates.
- Do not let the distribution layer own the location data. Letter 26-25 requires users to be onboarded as direct members of the exchange or customers of a registered broker with independent access, so an exchange cannot say the app knows and it does not.
- Say in the rulebook what happens to a position already open. Relief on remand is prospective. The user holding an open contract is the one nobody drafted for, which is the gap we described in our piece on open positions when a state blocks the exchange.
- Publish the answer. Directive 02 asks for settlement sources, conflicts and constraints stated where the trade happens. A market card that cannot say which layers were checked is not transparent about the thing most likely to void the trade.
The filing that will test this next
The question the Supreme Court has been asked is not this question. New Jersey filed a petition for certiorari on 2 September 2026, announced by Attorney General Jennifer Davenport's office, asking whether Dodd-Frank preempts states from regulating sports bets placed within their borders on Commission-registered markets. The Supreme Court's docket shows the case docketed on 8 September 2026 as No. 26-299, one amicus brief on file from the National Council of Legislators from Gaming States, and the respondent's deadline extended on 22 September 2026 to 9 November 2026. The Indian Gaming Association asked member tribes on 4 September 2026, over the signatures of Chairman David Z. Bean and Executive Director Jason Giles, to join a tribal amicus brief no earlier than 5 October 2026.
Whatever the Court does with preemption, it does not dispose of the third layer, because the Indian Gaming Regulatory Act is not state law. A ruling either way settles the state layer and leaves that statute where Judge McKeown left it.
The market that survives regulation is the one that was already behaving as if regulation had arrived. On this layer that is unglamorous work: a boundary dataset, a written eligibility answer per contract, a clause about open positions and a line on the market card. It is also the difference between a company with a map and a company with two thirds of one. That is the floor we think the category needs, and the commitment is open to sign.