States Can Regulate Prediction Markets As Gambling, Federal Appeals Court Rules

A federal appeals court has ruled that states can regulate prediction markets like Kalshi as gambling, handing state regulators their biggest legal victory yet against the booming industry. "There are still related lawsuits pending across the country, and legal experts believe the matter will ultimately be settled by the Supreme Court," reports CNN. "But Friday's ruling from the Ninth Circuit Court of Appeals is the largest courtroom victory to date for the states as they seek to regulate prediction sites." CNN reports: The 3-0 ruling came from a panel of three Trump-appointed judges. The case originated from Nevada, where regulators tried to shut down the Kalshi prediction site. [...] "The substance of the sports event contracts offered on Kalshi's (exchange) is sports gambling, regardless of whether Kalshi calls them swaps," the appeals panel wrote Friday, adding that "Kalshi's attempts to distinguish its sports event contracts from sportsbooks betting are unpersuasive." The judges also said it was "disingenuous" for Kalshi to argue in court that its products weren't sports-betting when it previously used that phrasing in marketing materials. Kalshi spokeswoman Dani Lever said in a statement: "Despite the Ninth Circuit's opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review." "It's the first ruling against Kalshi at the appellate level, and the opinion seemed to be pretty brutal for the company," said Dustin Gouker, an independent journalist who covers the prediction industry. "This gets us one step closer to an almost inevitable Supreme Court case on the legality of sports event contracts."

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