Kalshi today lost a major ruling over whether it can evade state gambling laws, as a federal appeals court found that Nevada can stop the prediction market from allowing sports bets. While the Trump administration is trying to help prediction markets avoid state regulation, a panel of three Trump-appointed judges unanimously ruled against Kalshi in today’s decision from the US Court of Appeals for the 9th Circuit. The Nevada Gaming Control Board today said the 9th Circuit “emphatically reject[ed] the view that the federal Commodity Exchange Act preempts application of Nevada’s gaming laws to sports-event contracts offered by Kalshi, Crypto.com, and Robinhood.” Nevada Governor Joe Lombardo, a Republican, said that “prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework.” The judges affirmed a district court order that let Nevada enforce state laws against Kalshi’s sports-related event contracts.
Kalshi sought injunctive relief, arguing that it is not a legal sports betting platform but a designated contract market under the Commodity Exchange Act (CEA) offering legal sports event contracts. Kalshi argues that the Commodity Futures Trading Commission (CFTC) has exclusive regulatory authority over its sports event contracts and, therefore, Nevada’s gaming regulations do not apply.” As in other cases involving Kalshi and state gambling laws, the key legal issue is whether a sports bet on a prediction market meets the definition of a “swap” that can only be regulated by the CFTC. The 9th Circuit ruling conflicts with a 3rd Circuit decision against New Jersey, which found that sports wagers on prediction markets are swaps.
The circuit split increases the likelihood that the Supreme Court will take up the issue.
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