A federal appeals court upheld Nevada’s authority to regulate Kalshi’s prediction market platform, where users place wagers on sporting events, rejecting the company’s argument that federal commodity trading law preempts state gaming rules.
The 9th U.S. Circuit Court of Appeals in San Francisco issued a unanimous 3-0 decision, finding that the Commodity Exchange Act likely does not bar Nevada from enforcing its regulations on Kalshi’s sports betting contracts. The ruling conflicts with a prior April decision by the 3rd U.S. Circuit Court of Appeals in Philadelphia, which determined that New Jersey lacked jurisdiction to regulate Kalshi’s platform.
The split between the two circuits increases the likelihood that the U.S. Supreme Court will take up the case to resolve whether state governments or the Commodity Futures Trading Commission (CFTC) hold regulatory authority over prediction markets. The outcome could set a precedent for how digital prediction platforms are governed in the U.S.
Kalshi, which operates a platform allowing users to bet on future events including sports outcomes, had sought to block Nevada’s enforcement actions, arguing that its contracts fall under CFTC oversight. The company’s legal challenge centered on whether state gaming laws could apply to its prediction market contracts, which it contends are distinct from traditional sports betting.
The dispute highlights broader regulatory uncertainty surrounding prediction markets, a growing segment of the digital trading and gaming industry. Nevada’s gaming regulators have maintained that their authority extends to all forms of sports wagering within the state, including contracts facilitated by platforms like Kalshi.
