Federal appeals court rules that states can regulate betting markets
A federal appeals court has ruled that states have the authority to regulate sports betting markets, potentially preempting federal commodities-trading laws. This decision marks a significant setback for prediction-market platforms like Kalshi and may lead to a Supreme Court review.
Why it matters
The ruling creates a legal split between circuits, increasing the likelihood of a Supreme Court intervention that could reshape the legality of prediction markets in the U.S.
The legal odyssey regarding prediction markets vs. gambling continues. On Friday, Kalshi stumbled onto an island full of giants wearing black robes.
Via the Associated Press, the U.S. Court of Appeals for the Ninth Circuit ruled on Friday that federal commodities-trading law does not preempt Nevada’s gambling law as to the regulation of placing wagers on sports.
The 3-0 ruling becomes the biggest loss to date by the prediction-market industry, and it could set the stage for the inevitable decision from the U.S. Supreme Court resolving the issue one way or the other. Especially since the U.S. Court of Appeals for the Third Circuit has ruled that New Jersey cannot regulate Kalshi.
A split among the various circuits often becomes a key factor in the Supreme Court’s decision to take up a given issue.
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