A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco ruled on Thursday that federal commodity trading law likely does not prevent Nevada from applying gaming regulations to Kalshi’s prediction markets platform, where users wager on sports events and other outcomes.
The decision marks a setback for Kalshi, which had sought to block Nevada’s oversight authority, arguing that its contracts fall under the jurisdiction of the U.S. Commodity Futures Trading Commission rather than state gaming regulators. The appeals court’s 3-0 ruling underscores that Nevada’s gaming laws may apply to the platform’s operations within the state.
The ruling creates a direct conflict with an April decision by the 3rd U.S. Circuit Court of Appeals in Philadelphia, which found that New Jersey lacked the authority to regulate Kalshi’s platform. The divergence between the two circuit courts increases the likelihood that the U.S. Supreme Court may intervene to resolve the jurisdictional dispute and clarify whether state or federal regulators have oversight of prediction markets.
Kalshi operates a platform where users place bets on events such as sports outcomes, election results, and economic indicators. The company has previously argued that its contracts are financial instruments akin to futures, subject to CFTC regulation, while state gaming authorities contend that the activity constitutes sports betting, which falls under their purview.
The Nevada Gaming Control Board had moved to regulate Kalshi’s operations in the state, prompting the company’s legal challenge. The 9th Circuit’s decision allows Nevada to proceed with its regulatory oversight, pending any further appeals or Supreme Court review.
