Prediction Markets Should Be Regulated as Gambling, Appeals Court Says
New Jersey has asked the U.S. Supreme Court to determine whether prediction markets fall under federal oversight or state gambling laws, following a circuit split regarding Kalshi's sports contracts. The $22 billion platform is locked in a fierce legal battle with state regulators. Nevada appellate courts have blocked prediction markets from offering sports event contracts, while a Michigan court issued a preliminary injunction against Kalshi accompanied by a potential $500,000 daily fine. Meanwhile, 44 state attorneys general argue that states possess the authority to regulate these platforms.
What changed
New Jersey officially petitioned the U.S. Supreme Court to resolve the legal status of Kalshi sports bets after conflicting court rulings created a circuit split.
Live updates
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New Jersey Asks Supreme Court to Resolve Kalshi Betting Fight
New Jersey has asked the U.S. Supreme Court to determine whether prediction markets fall under federal oversight or state gambling laws, following a circuit split regarding Kalshi's sports contracts. The $22 billion platform is locked in a fierce legal battle with state regulators. Nevada appellate courts have blocked prediction markets from offering sports event contracts, while a Michigan court issued a preliminary injunction against Kalshi accompanied by a potential $500,000 daily fine. Meanwhile, 44 state attorneys general argue that states possess the authority to regulate these platforms.
Why it matters
The dispute centers on whether prediction platforms operate as federally regulated financial swaps or traditional sports gambling ventures subject to state oversight and taxation. Missouri Attorney General Catherine Hanaway contends that prediction markets offering sports contracts should face the identical rules as licensed sportsbooks. Kalshi has drawn a line by refusing to list prediction markets concerning the Supreme Court case that will decide its regulatory future.
What is confirmed
- New Jersey asked the U.S. Supreme Court to settle whether prediction markets fall under federal oversight or state gambling laws.
- A circuit split raised the odds that the Supreme Court will rule on the Kalshi fight against states.
- Kalshi is a $22 billion platform facing legal challenges over its sports contracts.
Still unconfirmed
- Federal officials argue that states cannot regulate prediction markets.
What to watch next
- Whether the U.S. Supreme Court accepts New Jersey's petition to hear the case.
- Decisions from other state courts regarding Kalshi sports contracts and potential daily fines.
confidence 100%Sources used for this update (9)
- finance.yahoo.com — Kalshi Says It's a Prediction Market. The 9th Circuit Says It's Gambling.
- blockonomi.com — New Jersey Takes Prediction Markets Fight to Supreme Court
- www.wyso.org — New Jersey asks Supreme Court to resolve fight over Kalshi's future
- www.spotlightpa.org — Pa. election results, Shapiro’s speeches, and state laws are all prediction market bets. Could this lead to corruption?
- arstechnica.com — NJ urges SCOTUS to rule that Kalshi sports bets are gambling, not “swaps”
- finance.yahoo.com — Missouri AG: Prediction Markets Should Follow Same Rules as Sportsbooks
- www.independent.co.uk — Kalshi draws a line in the sand for the one thing it will not allow betting on: Supreme Court cases deciding its future
- www.yardbarker.com — Michigan Court Blocks Kalshi Sports Contracts, Threatens $500K Daily Fine
- startupfortune.com — New Jersey Asks the Supreme Court to Decide Kalshi's Sports Betting Fate
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Ninth Circuit Rules Prediction Markets Are Gambling; Kalshi Bans George Santos
The Ninth Circuit Court of Appeals ruled 3-0 that states can regulate prediction markets as gambling, rejecting Kalshi's claim that its sports contracts are federally regulated financial swaps. This decision allows state gaming boards to apply gambling taxes and oversight to these platforms. Separately, Kalshi issued its first lifetime ban to former congressman George Santos, fining him $71,356 after he bet on his own attendance at the State of the Union. These developments arrive as the industry faces contradictory court rulings and the start of the NFL season.
Why it matters
Prediction markets previously used federal commodity regulator licenses to bypass state gaming laws. This ruling disrupts that practice and creates a legal conflict that may require Supreme Court intervention. The industry now manages multibillion-dollar volumes, including $5 billion traded by users under 21 on Kalshi this year.
What is confirmed
- The Ninth Circuit Court of Appeals ruled 3-0 that states have the authority to regulate prediction markets as gambling.
- The court rejected Kalshi's argument that its sports contracts should be treated as federally regulated financial swaps.
- Kalshi permanently banned former congressman George Santos and fined him $71,356 for trading on his own attendance at the State of the Union.
- The ruling allows state gaming boards to oversee prediction platforms and apply gambling taxes.
Still unconfirmed
- Young adults under 21 traded $5 billion on Kalshi this year.
- Polymarket's AI is providing users with fabricated information.
What to watch next
- A potential Supreme Court challenge to the Ninth Circuit ruling
- The implementation of state gaming taxes on federal commodity exchanges
confidence 95%Sources used for this update (12)
- www.scotusblog.com — Updates on the new birthright citizenship executive order and mail-in ballots
- www.techspot.com — A federal court just ruled Kalshi's sports markets are basically sports betting
- news4sanantonio.com — Conflicting court rulings deepen fight over how prediction markets are regulated
- www.covers.com — Monday Morning Betting Hack: Prediction Markets’ Ninth Gate (to the Supreme Court)
- ftw.usatoday.com — Best Prediction Markets: How They Work & How to Trade (September 2026)
- nymag.com — Kalshi Issues Its First Lifetime Ban to None Other Than George Santos
- www.kacu.org — Kalshi bans former congressman George Santos for life after State of the Union trades
- www.igamingtoday.com — Appeals Court Affirms States’ Power to Treat Prediction Markets as Gambling
- www.southshorepress.com — Prediction Markets Take Major Hit
- www.theverge.com — George Santos is the first person banned from Kalshi for life.
- www.baltimoresun.com — Conflicting court rulings deepen fight over how prediction markets are regulated
- www.cbssports.com — NFL prediction markets 2026: Learn more about Kalshi, Polymarket, others ahead of 2026 NFL season
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Appeals Court Rules States Can Regulate Prediction Markets as Gambling
A federal appeals court ruled Friday that states have the authority to regulate prediction markets as gambling. The decision prevents Kalshi from blocking Nevada's oversight and rejects the claim that sports bets on the platform are "swaps" rather than gambling. Three Trump-appointed judges issued the ruling, which allows state gaming boards to oversee these platforms and apply gambling taxes. This decision disrupts the current industry practice of obtaining licenses through a federal commodity regulator to avoid state-level gaming restrictions and taxation.
Why it matters
Prediction platforms previously operated under federal commodity regulations to bypass state gaming laws. This legal conflict stems from an "all-out war" between the casino industry and prediction markets over licensing and tax obligations.
What is confirmed
- A federal appeals court ruled that states can regulate prediction markets as gambling.
- The court ruled that Kalshi cannot block Nevada's oversight of prediction markets.
- Three Trump-appointed judges issued the ruling.
- The court determined Kalshi sports bets are gambling rather than swaps.
Still unconfirmed
- Prediction platforms use an obscure federal commodity regulator to avoid state gaming board licenses and gambling taxes.
What to watch next
- Potential appeals to a higher court regarding the classification of prediction markets.
confidence 95%Sources used for this update (7)
- Reuters — Kalshi cannot block Nevada oversight of prediction markets, US appeals court rules
- Ars Technica — Court rules Kalshi sports bets aren’t “swaps,” just gambling with a different name
- The New York Times — Prediction Markets Should Be Regulated as Gambling, Appeals Court Says
- CNN — ‘This is an all-out war’: Inside the casino industry’s fight to stop prediction markets
- The New Republic — Three Trump-Appointed Judges Deliver Major Blow to Kalshi
- www.cnn.com — ‘This is an all-out war’: Inside the casino industry’s fight to stop prediction markets
- www.wqow.com — States can regulate prediction markets as gambling, federal appeals court rules