Ninth Circuit: Kalshi sports contracts deemed bets

The Ninth Circuit ruled Kalshi's sports event contracts are sports bets, not swaps, allowing Nevada to enforce gaming laws. This creates legal uncertainty for prediction markets and may reach the Supreme Court.

The US Court of Appeals for the Ninth Circuit has unanimously ruled against Kalshi and other prediction market platforms, dissolving a preliminary injunction that had protected them from Nevada's gaming regulators. The court determined that sports event contracts offered by Kalshi, Crypto.com, and Robinhood are considered sports bets under the Commodity Exchange Act (CEA), rather than swaps, making them subject to state gaming laws. This decision allows Nevada—and potentially other states—to enforce their gaming regulations on these platforms, even if they are federally registered with the Commodity Futures Trading Commission (CFTC). The ruling contrasts with a previous Third Circuit decision in New Jersey, creating a legal split that could require US Supreme Court intervention. As a result, the prediction market industry now faces significant uncertainty, as state authorities may regulate or take enforcement actions against federally registered event contract platforms.