Ninth Circuit rules states can regulate prediction markets as gambling
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A federal appeals court ruled Friday that states can regulate prediction markets like gambling, dealing a major blow to the industry. The 3-0 ruling from the Ninth Circuit Court of Appeals came in a case where Nevada regulators tried to shut down the Kalshi prediction site. Kalshi condemned the ruling and said it would pursue appeals.
Key Facts
- The Ninth Circuit Court of Appeals ruled 3-0 that states can regulate prediction markets like gambling.
- The case originated from Nevada, where regulators tried to shut down the Kalshi prediction site.
- Kalshi condemned the ruling and said it would pursue appeals.
- 44 states have argued that prediction platforms are gambling and should be subject to state gaming laws and taxes.
- The ruling came from a panel of three Trump-appointed judges.
The Ruling
A three-judge panel of the Ninth Circuit Court of Appeals ruled unanimously that states can regulate prediction markets like gambling. The panel consisted of three Trump-appointed judges. The court wrote that the substance of Kalshi's sports event contracts is sports gambling, regardless of whether Kalshi calls them swaps. The judges also said it was disingenuous for Kalshi to argue in court that its products were not sports betting when it previously used that phrasing in marketing materials.
Industry Response
Kalshi condemned the ruling and said it would pursue appeals. Kalshi spokeswoman Dani Lever said the company still believes CFTC regulations do not prohibit sports contracts and that the CFTC is working to clarify those regulations. Nevada Gov. Joe Lombardo said the ruling would help safeguard the integrity of the state's gaming industry. Mike Dreitzer, chair of the Nevada Gaming Control Board, said the ruling completely vindicates what the board has been saying all along.
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Ninth Circuit rules states can regulate prediction markets as gambling
