When I wrote two weeks ago that, “The prediction market debate…is likely to be settled sooner rather than later,” I had forgotten that Kalshi had appealed their loss to Nevada at the District Court level to the Ninth Circuit Court of Appeals. Today, the 9th Circuit ruled against Kalshi.
The unanimous opinion begins, “KalshiEX, LLC advertises itself as “the first app for legal
sports betting in all 50 states.”” That doesn’t sound like sports contracts, and even though “Kalshi argues that the Commodity Futures Trading Commission (CFTC) has exclusive regulatory authority over its sports event contracts and, therefore, Nevada’s gaming regulations do not apply,” the Court disagreed. This sets up a circuit split with the Third Circuit, and given that New Jersey (the loser in the Third Circuit) has asked the Supreme Court to review its case there is now a good chance that will happen.
Meanwhile, Nevada has instituted contempt proceedings against Kalshi for still allowing sports predictions/gambling in Nevada (arguing that Kalshi has not effectively geofenced Nevada). I expect Kalshi to institute robust geofencing in Nevada very soon or face significant monetary consequences.
