U.S. Appeals Court Rules Against Prediction Markets, Says Sports Contracts Are Sports Bets

The Ninth Circuit Court of Appeals has dealt a huge blow to prediction markets in their fight against state regulators over their sports-related event contracts. The court ruled in favor of the Nevada Gaming Control Board as it rejected Kalshi, Crypto.com and Robinhood’s requests for injunctive relief.

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Appeals Court Rules Against Prediction Markets In Nevada Case

The Ninth Circuit rejected Kalshi, Crypto.com, and Robinhood’s request for injunctive relief against the Nevada Gaming Control Board, as it ruled that these sports contracts are sports bets. In the opinion in the Kalshi case, the panel stated that the Commodity Exchange Act (CEA) likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts.

Furthermore, the court clarified that the CEA expressly preempts state regulation of swaps that are traded or executed on a DCM and that there is no dispute that Kalshi’s sports event contracts were traded on a DCM. However, the panel noted that under the CEA’s definition, the sports event contracts were not swaps because they were sports bets, dealing a huge blow to prediction markets.

“The broadest possible reading because, as discussed below, Kalshi’s sports event contracts have the hallmarks of sports betting,” a part of the opinion read. The court also stated that the Major Questions Doctrine applies if it accepts Kalshi’s argument that Congress delegated power to the CFTC to regulate gambling when it passed Dodd-Frank.

States have long regulated the gaming industry, which has led to the crackdown on these prediction markets, as state regulators argue that these platforms operate as unlicensed sports betting platforms. As CoinGape reported, Connecticut recently filed a lawsuit against Kalshi to block the platform’s sports event contracts.

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Case Likely To Head To The Supreme Court

Commenting on the court’s ruling in the Kalshi case, legal expert Daniel Wallach noted that the prediction market platform can either seek a rehearing en banc or go straight to the Supreme Court. He expects the latter, especially since the platform lost this appeal before three Trump-appointed judges. “Couldn’t have asked for a better panel draw,” he said.

Wallach also pointed out that election event contracts could fall under the microscope as the panel remanded the case to the district court to consider Nevada’s challenges to Kalshi’s election contracts as consistent with this opinion.

Cautionary tale.

No state was going after election contracts until Kalshi pushed the envelope on sports. https://t.co/AMx85lq3OL

— Daniel Wallach (@WALLACHLEGAL) August 28, 2026

Meanwhile, the legal expert also noted that the Appeals Court ruling is a win for states in the Ninth Circuit, including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. Notably, Arizona is one of nine states the CFTC has sued to defend its exclusive jurisdiction over these regulated prediction markets, arguing that all contracts offered on these platforms are swaps.