9th Circuit Rules Nevada Can Regulate Prediction Markets as Gambling

A federal appeals court on Friday dealt a significant blow to prediction market platforms, ruling that Nevada can regulate sports event contracts as gambling and rejecting their bid to block state oversight. The unanimous decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco found that the federal Commodity Exchange Act likely does not preempt Nevada's gaming laws as applied to Kalshi's sports contracts, allowing the state to proceed with enforcement actions.

The ruling stems from a lawsuit filed by Kalshi after the Nevada Gaming Control Board issued a cease-and-desist letter last year, ordering the platform to shut down its trading on sporting events and election outcomes. Kalshi had argued that as a federally regulated designated contract market overseen by the Commodity Futures Trading Commission, its operations should not be subject to state gambling regulations. However, the appeals court panel disagreed, stating that the substance of the contracts constitutes sports betting regardless of their label.

"The substance of the sports event contracts offered on Kalshi's exchange is sports gambling, regardless of whether Kalshi calls them...