Kalshi takes legal blow in court ruling confirming state powers over prediction markets
A U.S. appeals court ruled that Nevada can regulate Kalshi's prediction market contracts, contradicting a previous ruling that favored the platform's federal jurisdiction. This decision creates a legal conflict that likely necessitates a Supreme Court intervention to clarify the status of prediction markets.
Why it matters
The ruling creates regulatory uncertainty for the burgeoning prediction market industry and highlights a growing conflict between state and federal oversight.
The panel of judges from the U.S. Court of Appeals for the Ninth Circuit issued a unanimous decision on Friday, disagreeing with Kalshi's argument that Nevada regulators don't have a role in overseeing its business, which is conducted on a platform regulated by the Commodity Futures Trading Commission and the law that underpins it, the Commodity Exchange Act.
"The panel concluded that the CEA likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts," according to the ruling, which disputed that the activity qualifies as "swaps" trades that belong under the CFTC's jurisdiction. Under U.S. commodities law, "the sports event contracts were not 'swaps' because they were sports bets."
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in