Ninth Circuit rules Nevada may regulate Kalshi’s prediction market like sports gambling

The 9th Circuit Court of Appeals ruled Friday that states can regulate prediction market platforms like gambling and sportsbooks, dealing a heavy blow to the industry. In a unanimous ruling, a three-judge panel agreed with a lower court decision allowing Nevada gaming regulators to oversee the prediction market Kalshi, which argued only the federal government...

A federal appeals court has ruled that states can regulate prediction markets like Kalshi as gambling, handing state regulators their biggest legal victory yet against the booming industry. "There are still related lawsuits pending across the country, and legal experts believe the matter will ultimately be settled by the Supreme Court," reports CNN. "But Friday's ruling from the Ninth Circuit Court of Appeals is the largest courtroom victory to date for the states as they seek to regulate prediction sites." CNN reports: The 3-0 ruling came from a panel of three Trump-appointed judges. The case originated from Nevada, where regulators tried to shut down the Kalshi prediction site. [...] "The substance of the sports event contracts offered on Kalshi's (exchange) is sports gambling, regardless of whether Kalshi calls them swaps," the appeals panel wrote Friday, adding that "Kalshi's attempts to distinguish its sports event contracts from sportsbooks betting are unpersuasive." The judges also said it was "disingenuous" for Kalshi to argue in court that its products weren't sports-betting when it previously used that phrasing in marketing materials. Kalshi spokeswoman Dani Lever said in a statement: "Despite the Ninth Circuit's opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review." "It's the first ruling against Kalshi at the appellate level, and the opinion seemed to be pretty brutal for the company," said Dustin Gouker, an independent journalist who covers the prediction industry. "This gets us one step closer to an almost inevitable Supreme Court case on the legality of sports event contracts." Read more of this story at Slashdot.

A federal court has dealt a serious blow to prediction markets, ruling that Kalshi can’t block the state of Nevada from regulating its platform. The Ninth Circuit ​Court of Appeals in San Francisco ​ruled 3-0 against Kalshi Friday, saying that federal commodity training law doesn’t block Nevada from also regulating the platform when it comes to betting on sports events. All three judges were appointed to the federal bench by President Trump.Circuit Judge Ryan Nelson said Kalshi’s business clearly seems to be in sports betting, “a quintessential form of gambling” that would put it out of the purview of the federal Commodity Futures Trading Commission. He noted that Kalshi has run ads describing itself as “the first app for legal sports betting.” “It is difficult, then, to conclude that Congress intended to ​upend its decades of careful regulation ​of gambling based on broad definitions ⁠of the words used in a Wall Street Reform Bill,” Nelson wrote in his ruling. “The CFTC is not a national gambling regulator. No one suggested it was until over a decade after the law was passed.”The Trump administration has fought to keep states from regulating prediction markets, arguing that the CFTC is in charge. Donald Trump Jr., the president’s son, told Republican state attorneys general at a meeting earlier this year to back off any action against businesses like Kalshi and Polymarket. The lack of clarity over what laws govern prediction markets, which include betting on political and international events in addition to sports, has already proven to be a major problem. Nevada’s win on Friday is one of several legal actions launched by both Republican and Democratic state governments against prediction markets, with 20 states in litigation over whether prediction markets fall under sports gambling laws. In July, 44 states signed a letter calling prediction markets a “new form of casino” endangering young people. In March, Arizona became the first state to criminally charge Kalshi for allowing people to bet on elections and “operating an illegal gambling business.”  In April, the Third ​Circuit Court of Appeals in Philadelphia ruled against the state of New Jersey’s attempt to regulate prediction markets, setting up conflicting rulings and increasing the likelihood that the Supreme Court will address oversight of prediction markets in the near future.