Kalshi Faces Legal Setback as Court Ruling Upholds State Authority Over Prediction Markets
Rather than shutting down the increasingly popular prediction markets industry, the ruling has deepened the legal uncertainty surrounding retail trading. In April, another federal court reached the opposite conclusion, ruling that New Jersey had no authority to regulate Kalshi. The conflicting decisions increase the likelihood that the U.S. Supreme Court will eventually address the industry’s central legal question.
“The Ninth Circuit has now teed up a circuit split that calls out for resolution by the Supreme Court,” said CFTC spokesman Zach Fulton in an email, accusing the judges of misreading the law. “A derivative contract structured as a swap is a swap regardless of the underlying subject matter; the only exceptions in statute are onions and movie box office receipts. The Ninth Circuit erred today when it invented a new and atextual exception to the CEA.”
Nevada calls Kalshi contracts illegal wagering
Nevada state authorities have opposed prediction market businesses since 2025. On Friday, they reiterated that Kalshi had engaged in illegal wagering under Nevada gambling law, although the company had already withdrawn from Nevada and other jurisdictions following orders from local authorities.
“This completely vindicates what we have been saying all along,” Nevada Gaming Control Board Chairman Mike Dreitzer said in a statement responding to the ruling, which also referenced betting products offered by Robinhood and Crypto.com. “This is sports betting and needs to be properly regulated by the state.”
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