The Ninth Circuit Court of Appeals unanimously rejected Kalshi's lawsuit, setting up a potential Supreme Court review. The Third Circuit had previously ruled in the company's favour, creating a circuit split that makes higher-court intervention likely.
Polymarket launched a market on whether the Supreme Court will hear the case on the legality of sports contracts on prediction platforms. Following the Ninth Circuit ruling, the probability jumped from 29% to 52%. Trading volume exceeded $1 million, with the chance of the case being accepted by 31 October standing at 6%.
The dispute centres on interpretation of the Commodity Exchange Act. Kalshi argues the CEA permits sports markets, but Ninth Circuit judges disagreed. The law includes a provision stating that contracts related to gambling may be contrary to the public interest. Senator Chris Dodd, one of the authors of the 2010 amendments, confirmed that Congress did not intend to legalise sports betting through the CEA.
The court noted the statute's ambiguous wording: it grants regulator CFTC the authority to prohibit gaming contracts but contains no outright ban. The CFTC backs Kalshi and has proposed new rules that more clearly allow sports contracts. States, tribes and gaming operators oppose the move.
CFTC representative Zach Fulton said the court misinterpreted the law and the case is now ripe for Supreme Court review. Kalshi and Robinhood intend to appeal the Ninth Circuit decision. New Jersey will file an appeal of the Third Circuit ruling by 3 September.
Legal experts are split. Daniel Wallach puts the odds of a ruling against prediction platforms at 70–80%. Professor Melinda Roth considers the outcome a toss-up. The process could drag on; the PASPA case on sports betting legalisation took several years and was only resolved in 2018.
