Trump-Appointed Judges Rule Nevada Can Regulate Kalshi’s Sports Contracts

A federal appeals court has dealt a significant blow to prediction-market operator Kalshi, ruling that Nevada can regulate the company's sports-event contracts under state gambling laws.

Kalshi faces increased regulatory pressure after a federal appeals court ruled that Nevada can regulate its sports-event contracts under state gambling laws. [Photo: Sanfranman59, Wikimedia Commons]

A three-judge panel of the Ninth US Circuit Court of Appeals in San Francisco ruled unanimously that federal commodities law does not prevent Nevada from regulating Kalshi's sports contracts as gambling, Hafiz Rashid reported for The New Republic.

All three judges on the panel were appointed by President Donald Trump.

Circuit Judge Ryan Nelson wrote that Kalshi's sports contracts resemble traditional sports betting and that the federal Commodity Futures Trading Commission (CFTC) does not have exclusive authority over such gambling activity.

The ruling allows Nevada to require Kalshi to obtain a state gaming license. Kalshi has argued that its event contracts are financial products regulated by the CFTC rather than sports wagers subject to state gambling laws.

The Ninth Circuit's decision conflicts with an earlier ruling from the Third Circuit that favored Kalshi in a dispute involving New Jersey. The split between federal appeals courts increases the possibility that the US Supreme Court could eventually be asked to resolve the issue.

The legal fight is part of a broader nationwide dispute over how prediction markets should be regulated.

Kalshi and other platforms offer contracts tied to sports, elections, economic indicators and other events, while states have argued that sports-related contracts constitute gambling subject to state law.

The Nevada case also includes questions involving election-related contracts that were sent back to a lower court for further proceedings.