Court Rules Kalshi's Sports Bets Are Gambling, Not Swaps
A federal appeals court has rejected Kalshi's attempt to avoid state gambling laws, affirming Nevada's authority to stop the prediction market from offering sports bets. The ruling stated these contracts are gambling, not federally regulated derivatives.
A federal appeals court has ruled that Kalshi, a prediction market company, cannot evade Nevada's gambling laws. The US Court of Appeals for the 9th Circuit unanimously decided that the state can prohibit Kalshi from offering contracts based on sports events, classifying them as gambling.
The ruling counters the Trump administration's efforts to shield prediction markets from state regulation. The three-judge panel, all appointed by Trump, found that the federal Commodity Exchange Act does not preempt Nevada's gaming laws when it comes to Kalshi's sports-event contracts.
The Nevada Gaming Control Board stated that the appeals court "emphatically rejected" the view that federal law overrides state gambling regulations. Governor Joe Lombardo affirmed that prediction markets offering sports-event contracts are indeed gambling and must comply with Nevada's established framework.
This decision upholds a previous district court order that allowed Nevada to enforce its state laws against Kalshi's sports-related contracts, concluding that they function as wagers rather than federally regulated financial instruments.