Prediction Markets Should Be Regulated as Gambling, Appeals Court Says

Judge Ryan Nelson wrote in the opinion issued on Friday that Kalshi’s “sports event contracts were not ‘swaps’ because they were sports bets,” and should be subject to state gambling laws, as a previous federal court had determined. In July, Kalshi had agreed to restrict users in Nevada from wagering on sports, elections and entertainment.

But the ruling contradicted a decision by Philadelphia’s Third Circuit in April that said Kalshi’s sports event contracts were swaps under the Commodity Exchange Act, which granted them federal pre-emption from state laws.

“The Ninth Circuit has now teed up a circuit split that calls out for resolution by the Supreme Court,” said Zach Fulton, a spokesman for the Commodity Futures Trading Commission, or C.F.T.C., the federal agency that oversees the industry. Mr. Fulton added that the court “erred today” and accused it of inventing a new exception to the Commodity Exchange Act.

Aaron Ford, Nevada’s attorney general, said in a statement that his office was “proud to have defended Nevada’s authority,” adding that “the Ninth Circuit rejected that argument and made clear what we have maintained from the beginning: Sports betting does not become something else simply because a company calls it an ‘event contract.’”

A spokeswoman for Kalshi, Dani Lever, said the company believed that C.F.T.C. regulations did not prohibit sports contracts, despite the court’s opinion. “We will be seeking further review,” she said.

Article source: https://www.nytimes.com/2026/08/28/technology/kalshi-prediction-markets-federal-courts.html