Ninth Circuit Rules Prediction Markets Are Gambling

A three-judge panel of the Ninth Circuit Court of Appeals held that sports-related event contracts offered on platforms such as Kalshi, Crypto.com and Robinhood are “sports gambling,” not federally regulated swaps. The decision rejects the platforms’ request for injunctive relief and affirms Nevada’s authority to apply state gaming laws to these contracts. The ruling creates binding precedent for federal judges in California, Arizona and six other states that have pursued similar regulation.

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Prediction-market sites have operated under licenses from the Commodity Futures Trading Commission (CFTC), which classifies all event contracts as derivatives (“swaps”). Forty-four states, however, argue that contracts tied to sports outcomes are fundamentally gambling and should fall under state gaming statutes. The Ninth Circuit’s opinion directly contradicts an April ruling from the Third Circuit, which held that the CFTC has exclusive jurisdiction over such contracts. Legal scholars have long expected the dispute to reach the Supreme Court.

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• Alcinia Whiters, deputy communications director for the Nevada Attorney General’s office, called the ruling “a major victory” and emphasized that Kalshi was attempting to sidestep Nevada’s gambling laws.

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The Ninth Circuit opinion provides a legal foothold for states to enforce gambling regulations on prediction-market platforms, potentially prompting shutdowns or licensing requirements in additional jurisdictions. With a clear circuit split—New Jersey’s case pending in the Third Circuit—lawyers for affected states and platforms are positioning the issue for Supreme Court review. Industry observers note that weekly trading volume on Kalshi now reaches billions of dollars, largely driven by sports markets, underscoring the stakes of the regulatory battle.

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• “It’s the first ruling against Kalshi at the appellate level, and the opinion seemed to be pretty brutal for the company,” — Dustin Gouker, an independent journalist

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• “The substance of the sports event contracts offered on Kalshi's DCM [designated contract market] is sports gambling, regardless of whether Kalshi calls them swaps,” — Ryan Nelson, one of the 9th Circuit judges

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