Prediction Markets Platforms Hit by Appeals Court Ruling on Event Contracts

A US appeals court has dealt a blow to prediction markets platforms Kalshi and Crypto.com by ruling against their requests for injunctive relief in a dispute with Nevada's Gaming Control Board.

The Ninth Circuit Court of Appeals rejected the platforms' claims that sports-related event contracts are derivatives regulated by the federal government, instead concluding they are sports bets governed by state gaming regulations.

This decision contradicts a previous ruling from the Third Circuit Court of Appeals in April, which held that only the Commodity Futures Trading Commission (CFTC) has jurisdiction to regulate such contracts. The CFTC has been actively defending its authority over prediction markets against nine states.

The Ninth Circuit's ruling now sets up a likely Supreme Court showdown between state gaming regulators and the CFTC, which claims exclusive jurisdiction over event contracts. Legal experts believe this controversy will ultimately reach the nation's highest court.