Federal appeals court rules that states can regulate betting markets

Live updates

1. 1h ago

   Federal appeals court rules states can regulate betting markets

   A federal appeals court has ruled that states have the authority to regulate prediction markets as gambling, rejecting Kalshi's claim that federal commodities law preempts state oversight. The unanimous decision by the Ninth Circuit Court of Appeals prevents Kalshi from operating sports and election trading in Nevada without a state gambling license. This ruling characterizes prediction market contracts as gambling rather than swaps.

   Why it matters

   The decision intensifies a legal dispute over whether prediction markets are financial products regulated by Washington or state-controlled gambling operations. This issue may ultimately be settled by the Supreme Court, as the ruling creates a circuit split with a previous decision by the 3rd Circuit. The case has implications for the regulation of prediction markets and sports betting in the United States.

   What is confirmed

   • The Ninth Circuit Court of Appeals found that Kalshi's sports contracts amount to sports betting, even though the company offers them through a federally regulated exchange.
   • The appeals court held that sports event contracts are bets—and not 'swaps,' which fall under the exclusive jurisdiction of the U.S. Commodity Futures Trading Commission under the federal Commodity Exchange Act.
   • A ruling by the U.S. Court of Appeals for the 9th Circuit allowing Nevada to regulate prediction markets like Kalshi creates a split with the 3rd Circuit.

   Still unconfirmed

   • Kalshi this week announced it had entered into a brand partnership with the Padres and three other of the 'most beloved teams'

   What to watch next

   • The Supreme Court's decision on whether to hear the case and settle the circuit split
   • The impact of the ruling on Kalshi's operations and partnerships in other states
   • The response from the U.S. Commodity Futures Trading Commission on the ruling and its implications for federal regulation
   Sources used for this update (5)

   1. www.techspot.com — A federal court just ruled Kalshi's sports markets are basically sports betting
   2. newschannel9.com — Conflicting court rulings deepen fight over how prediction markets are regulated
   3. voiceofsandiego.org — Federal Court Rules Padres Partner Offers Illegal Gambling
   4. www.law.com — 9th Circuit Says Nevada Can Regulate Kalshi Contracts as Gambling, Creating Circuit Split
   5. www.americanbanker.com — Kalshi ruling favoring states tees up Supreme Court fight
   confidence 85%
2. 16h ago

   Ninth Circuit rules Nevada can regulate Kalshi sports contracts as gambling

   A federal appeals court ruled on August 28 that Nevada has the authority to regulate prediction markets as gambling. The unanimous decision rejects Kalshi's claim that federal commodities law preempts state oversight of its sports-event contracts. This ruling prevents the platform from operating sports and election trading in Nevada without a state gambling license. The court characterized these contracts as gambling rather than swaps, intensifying a legal dispute over whether prediction markets are financial products regulated by Washington or state-controlled gambling operations.

   Why it matters

   Prediction platforms typically seek licensing from a federal commodity regulator to avoid state gaming board oversight and gambling taxes. This decision creates a circuit split with a previous Third Circuit ruling. Such disagreement between federal courts often leads to a Supreme Court review.

   What is confirmed

   • A federal appeals court ruled on August 28 that states can regulate prediction markets as gambling.
   • The Ninth Circuit Court of Appeals rejected Kalshi's claim that federal law preempts Nevada's authority over sports contracts.
   • The court's decision was unanimous.
   • The ruling prevents Kalshi from restarting trading on sports and election events in Nevada without a state gambling license.

   Still unconfirmed

   • Prediction platforms avoid being taxed like gambling because they are licensed by a federal commodity regulator.

   What to watch next

   • Supreme Court decision on the circuit split between the Third and Ninth Circuits.
   • Kalshi's application for a Nevada state gambling license.
   Sources used for this update (6)

   1. en.bloomingbit.io — US Appeals Court Backs Nevada’s Authority to Regulate Kalshi Sports Contracts
   2. thecurrencyanalytics.com — Ninth Circuit Deal Blow to Kalshi’s CFTC Preemption Claim in Nevada Betting Dispute
   3. www.cnn.com — ‘This is an all-out war’: Inside the casino industry’s fight to stop prediction markets
   4. www.wqow.com — States can regulate prediction markets as gambling, federal appeals court rules
   5. www.tekedia.com — Appeals Court Rules Nevada Can Regulate Kalshi, Deepening Legal Fight Over Prediction Markets
   6. cryptonews.net — Kalshi ruling puts CFTC prediction rules at risk
   confidence 100%
3. 2d ago

   9th Circuit Rules States Can Regulate Prediction Markets as Gambling

   A 9th U.S. Circuit Court of Appeals panel ruled that states have the authority to regulate prediction markets as gambling. The 3-0 decision prevents prediction market operator Kalshi from restarting trading on sporting and election events in Nevada without a state gambling license. The court rejected Kalshi's argument that its sports-related event contracts are "swaps," instead characterizing them as gambling under a different name. This ruling creates a circuit split with a previous Third Circuit decision, increasing the likelihood of a Supreme Court review.

   Why it matters

   Prediction markets allow users to bet on the outcome of future events. Kalshi attempted to bypass state oversight by classifying these bets as financial swaps rather than gambling. This legal distinction determines whether a platform must obtain state-level gaming licenses to operate.

   What is confirmed

   • The 9th U.S. Circuit Court of Appeals ruled that states can regulate prediction markets as gambling.
   • A federal appeals court panel refused to let Kalshi restart trading on sports and election events in Nevada.
   • The court ruled that sports-related event contracts are not swaps.
   • The 3-0 ruling creates a circuit split with a Third Circuit decision from April.
   • Kalshi must obtain a license from state gambling regulators to operate in Nevada.

   What to watch next

   • A petition for review or a final decision by the U.S. Supreme Court
   • Further legal challenges from Kalshi against state gambling regulators
   Sources used for this update (11)

   1. CNN — States can regulate prediction markets as gambling, federal appeals court rules
   2. Reuters — Kalshi cannot block Nevada oversight of prediction markets, US appeals court rules
   3. CNBC — U.S. appeals court rules against prediction markets, sets up likely fight at Supreme Court
   4. NBC Sports — Federal appeals court rules that states can regulate betting markets
   5. Ars Technica — Court rules Kalshi sports bets aren’t “swaps,” just gambling with a different name
   6. finance.yahoo.com — Ninth Circuit rules states can regulate prediction markets as gambling
   7. www.azfamily.com — Federal court deals win to states in fight to regulate prediction market platforms
   8. www.cnbc.com — U.S. appeals court rules against prediction markets, sets up likely fight at Supreme Court
   9. thecurrencyanalytics.com — Kalshi Faces Legal Chaos After Appeals Court Rules States Control Prediction Markets
   10. arstechnica.com — Court rules Kalshi sports bets aren’t “swaps,” just gambling with a different name
   11. www.newsday.com — Federal appeals court panel gives Nevada a win in its fight to regulate prediction market Kalshi
   confidence 100%