In a decision that reshuffles the legal footing for online betting, the Ninth Circuit Court of Appeals ruled on Thursday that Kalshi cannot block Nevada regulators from overseeing its sports-related prediction contracts. The court found that such contracts do not qualify as swaps under federal law.
The ruling directly contradicts an April decision from the Third Circuit Court of Appeals, which had leaned in Kalshi’s favor. That split between two federal appeals courts sets up a likely showdown at the U.S. Supreme Court, where the boundary between event contracts and regulated gambling may finally be settled.
At the center of the dispute is whether sports-related event contracts belong under the exclusive authority of the Commodity Futures Trading Commission, as Kalshi argues, or fall within the reach of state gambling regulators. Nevada, home to the country’s most established sports-betting framework, insisted on its right to supervise the platform’s offerings.
Shares of traditional sportsbook operators climbed on the news. DraftKings and Flutter Entertainment, the parent company of FanDuel, both rose as investors read the ruling as a check on prediction-market rivals that have expanded into sports wagering without state licensing.
Prediction markets let users trade contracts tied to real-world outcomes, from elections to sporting events, with prices moving as opinion shifts. The format has drawn regulatory attention across the United States, and New York has separately accused Kalshi of running what amounts to illegal gambling.
For the licensed sportsbooks, the distinction carries real financial weight. Prediction platforms operating under federal oversight have avoided the state taxes and licensing fees that companies like DraftKings pay, creating what established operators view as an uneven playing field.
The conflicting appellate rulings leave the industry in an uncertain position. Kalshi and similar platforms can continue operating in states aligned with the Third Circuit’s reasoning, while facing tighter scrutiny in jurisdictions covered by the Ninth Circuit, which spans much of the western United States including Nevada.
A Supreme Court review would determine whether a single national standard governs these markets or whether states retain the power to regulate contracts tied to game outcomes. For bettors, the answer will shape which platforms remain legal in their state and whether prediction contracts count as investing or gambling.