Federal appeals court panel gives Nevada a win in its fight to regulate prediction market Kalshi

A federal appeals court panel on Friday declined to allow prediction market operator Kalshi to resume trading on sports and election events in Nevada, while it continues to challenge the state's effort to shut it down until it obtains a license from gambling regulators. The 9th U.S. Circuit Court of Appeals in San Francisco ruled that Kalshi did not convincingly argue that federal commodities trading law supersedes Nevada's state gambling law in determining who should regulate its sports event contracts.

The panel stated that federal law likely does not preempt Nevada from applying its gambling regulations to Kalshi's sports event contracts, given that Nevada is home to the country's largest commercial casino market. Nevada's attorney general hailed the ruling as a "major victory for Nevada and our longstanding authority to regulate gaming in our state."

Kalshi sought to circumvent Nevada's laws, but the 9th Circuit made clear that sports betting does not transform into something different merely because a company labels it an 'event contract.' The 9th Circuit panel also sent the question of Kalshi's trading on election contracts back to a lower court to consider Nevada's challenges.

Kalshi intends to pursue further review of the decision, while trading on sports, entertainment, and election contracts remains blocked in Nevada.