Ninth Circuit Sides with Nevada in Kalshi Prediction Market Dispute
The Ninth Circuit Court of Appeals has ruled in favor of Nevada's right to regulate prediction markets, specifically targeting Kalshi's sports event contracts. This decision marks a significant setback for the company and intensifies regulatory scrutiny on the industry as a whole.
In a unanimous opinion, the three-member judicial panel concluded that Kalshi's sports event products likely constitute sports wagering under Nevada's statutory framework rather than 'swaps' subject to federal oversight through the Commodity Exchange Act. This classification has significant implications because swap transactions fall under the regulatory purview of the Commodity Futures Trading Commission.
The Ninth Circuit decision stands in stark contrast to an April ruling in which another federal court determined that New Jersey lacked authority to regulate Kalshi's operations, establishing a circuit split between federal appeals courts. The CFTC has expressed strong disagreement with the Ninth Circuit's legal analysis, stating it 'invented a new and atextual exception' to existing federal commodities legislation.
Nevada Gaming Control Board Chairman Mike Dreitzer welcomed the appellate decision as vindication of the state's position, while Kalshi contested the ruling through spokesperson Dani Lever. The company maintained its position that federal regulations do not prohibit sports event contracts and noted the CFTC is working to provide regulatory clarity.