States Can Regulate Prediction Markets As Gambling, Federal Appeals Court Rules
A federal appeals court has ruled that states can regulate prediction markets like Kalshi as gambling, handing state regulators their biggest legal victory yet against the booming industry. "There are still related lawsuits pending across the country, and legal experts believe the matter will ultimately be settled by the Supreme Court," reports CNN. "But Friday's ruling from the Ninth Circuit…
The Ninth Circuit Court of Appeals has ruled that states can legally classify prediction markets, such as Kalshi, as gambling, marking a significant victory for state regulators in their ongoing battle against the rapidly growing industry. The 3-0 decision, handed down by a panel of three judges appointed by former President Donald Trump, stems from a case originating in Nevada, where authorities attempted to shut down the Kalshi prediction site.
According to the panel, the contracts offered by Kalshi for sports events are essentially sports gambling, irrespective of Kalshi's classification of them as swaps. The judges dismissed Kalshi's attempts to differentiate its products from sportsbooks, deeming them insincere, as the company had previously used similar language in its marketing materials.
A Kalshi spokeswoman defended the company's stance, asserting that CFTC regulations as currently written do not ban sports contracts, and the agency is working to clarify those rules. In any case, the company plans to pursue further legal review. This ruling represents the first setback for Kalshi at the appellate level, and analysts believe it will ultimately lead to a Supreme Court case determining the legality of sports event contracts.
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