The US Ninth Circuit Court of Appeals ruled unanimously that Nevada may enforce gambling laws against prediction market operator Kalshi. The 3-0 decision overturns an injunction that had blocked the state's gaming regulators from acting against the company's financial products.
Judge Ryan Nelson wrote in the 50-page opinion that sports event contracts on Kalshi's platform are sports bets regardless of how the company labels them. The court saw no difference between placing a bet on the Las Vegas Raiders with a 7.5-point spread at Caesars Sportsbook and a similar contract on Kalshi. 'To deny that Kalshi's sports contracts are sports bets is to engage in sophistry,' Nelson stated.
Nevada Gaming Control Board Chair Mike Dreitzer called the ruling a complete victory: 'These are sports bets, and the state should regulate them.'
The American Gaming Association backed the decision. By its count, states have lost over $1 billion in tax revenue due to the growth of prediction markets. AGA President Bill Miller called the ruling 'an important win for consumer and taxpayer protection.'
The Commodity Futures Trading Commission continues to assert that regulation of event contracts falls under its exclusive jurisdiction. A CFTC representative did not respond to a request for comment.
The Ninth Circuit ruling conflicts with an April decision by the Third Circuit, which allowed Kalshi to operate in New Jersey. Such splits between circuits often lead to Supreme Court review. On Polymarket, the probability that SCOTUS will take the case by year-end rose from 30% to 64% after the ruling. Trading volume on that contract exceeded $976,000.
The New York Times reported that Donald Trump Jr. urged state attorneys general in March not to pressure prediction markets. He received over $300,000 in Kalshi shares for work as a strategic adviser to the company.
