US Court Deals Major Blow to Kalshi: Dispute Over Regulatory Authority for Prediction Markets May Be Appealed to Supreme Court

The U.S. Ninth Circuit Court of Appeals recently ruled that Nevada has the authority to regulate Kalshi’s sports event contracts as gambling, rejecting Kalshi’s core claim that it is exclusively overseen by the U.S. Commodity Futures Trading Commission (CFTC) and that state governments lack the right to intervene. The court held that the relevant sports event contracts are essentially sports gambling, not "swap transactions" that should be fully regulated at the federal level. This ruling stands in sharp conflict with a separate federal appeals court decision in April this year that favored Kalshi and limited New Jersey’s regulatory power, marking the emergence of a "circuit split" among U.S. federal courts. The question of regulatory jurisdiction over prediction markets may ultimately need to be settled by the U.S. Supreme Court. Kalshi said it will seek further review, stressing that federal law still restricts states from regulating federally licensed exchanges. Meanwhile, Nevada’s regulatory agency stated that the ruling confirms sports contracts in prediction markets are essentially gambling and should be subject to state-level regulation.