Business, Finance & Tech
Court Says States Can Regulate Prediction Markets as Gambling
A federal appeals court ruled Friday that states can regulate prediction markets like gambling, dealing a major blow to the rapidly growing industry.
There are still related lawsuits pending across the country, and legal experts believe the matter could ultimately reach the Supreme Court. Friday’s ruling from the Ninth Circuit Court of Appeals is the biggest courtroom victory so far for states seeking to regulate prediction sites.
The 3-0 ruling came from a panel of three Trump-appointed judges. The case originated in Nevada, where regulators attempted to shut down the Kalshi prediction site.
Prediction markets such as Kalshi and Polymarket allow users to wager on a wide range of outcomes, including sports, entertainment, award shows, album releases, weather and financial markets.
With backing from the Trump administration, prediction markets have been operating as federally regulated financial exchanges. They receive licenses from the Commodity Futures Trading Commission to offer “event contracts,” which are a type of derivative swap.
But 44 states have argued that these platforms are actually gambling operations and should be subject to state gaming laws and taxes.
“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 efforts to distinguish its sports contracts from traditional sportsbook wagers were unpersuasive.
The judges also called it “disingenuous” for Kalshi to argue in court that its products were not sports betting after the company had used similar language in marketing materials.
CNN has a partnership with Kalshi and uses its data to cover some major events, but editorial employees are not allowed to use prediction sites.
Kalshi vows appeals
Kalshi condemned the ruling Friday and said it would continue its legal challenge.
“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,” Kalshi spokeswoman Dani Lever said in a statement. “We will be seeking further review.”
The case began after Nevada regulators moved against Kalshi and prediction markets operated by Crypto.com and Robinhood.
Nevada Gov. Joe Lombardo, a Republican, said the ruling would help “safeguard the integrity of our gaming industry.”
Mike Dreitzer, chair of the Nevada Gaming Control Board, said the decision “completely vindicates” the state’s position.
A looming Supreme Court fight?
Friday’s decision creates a split among federal appeals courts, with conflicting rulings on whether states can regulate prediction markets.
Earlier this year, the Third Circuit Court of Appeals sided with prediction sites and blocked New Jersey’s attempt to apply state gambling laws to the companies. Lawyers for New Jersey have said they plan to take that case to the Supreme Court.
Dustin Gouker, an independent journalist who covers the prediction market industry, said the Ninth Circuit ruling moves the issue closer to a potential Supreme Court case over sports event contracts.
The Nevada ruling could also give other states more authority to attempt to shut down or regulate Kalshi. The Ninth Circuit’s decision is binding precedent for federal judges in California, Arizona and six other states that have sought greater regulation.
Prediction markets have grown rapidly this year, with Kalshi now reporting billions of dollars in weekly trading volume, much of it coming from sports markets.
Polymarket, which was not part of the Nevada lawsuit, is the second-largest prediction site in the United States. CNN has reached out to the company for comment.
By: CNN Newsource
August 28, 2026
Latest Instagram Posts
behind the scenes of The Roggin Report | Blooper Edition 🎬📺 #therogginreport #bloopers #behindthescenes #fyp #nbcpalmsprings
President Donald Trump brought up the idea of renaming the Atlantic Ocean or Pacific Ocean during a rally in Clarksville, Tennessee.
A Level 3 of 4 threat of flooding rainfall has been issued for parts of Southern California to southern Nevada, southwest Utah and northwest Arizona, including San Diego and Las Vegas.
BREAKING NEWS 🚨: Calvin Harris officially rescheduled for Head Trip day 2 #headtripfestival #calvinharris #severeweather #tropicalstorm #indio
Attendees are returning to the Empire Polo Grounds for day 2 of the EDM festival, ‘Head Trip’, after performances were stopped last night due to severe weather. Stay tuned with NBC Palm Springs to see how the weather is affecting festival goers’ plans. #headtripfestival #severeweather #flashfloodalert #760 #nbcpalmsprings
Overnight Flooding Hits Palm Springs Heavy rain brought flooding to Palm Springs overnight, prompting police to shut down Indian Canyon due to flooding. Much of this video shows conditions along the Indian Canyon corridor as water inundated roadways. Drivers are urged to use caution and watch for changing conditions.
BREAKING NEWS: Head Trip Festival in Indio suspended its show Saturday night due to approaching severe weather and lightning. A message displayed on the stage screens announced: “Attention in the festival, this is a lightning alert. The show is suspended due to lightning.” Festivalgoers were told to leave the Empire Polo Club venue and return to their cars and camps. The festival was expected to draw approximately 70,000 attendees overall, though the number asked to leave Saturday night has not been confirmed. It remains unclear when attendees will be allowed back inside or whether scheduled performances, including headliners Calvin Harris and Swedish House Mafia, will proceed as planned. The suspension comes as Tropical Storm Rachel brings rain and potential flooding concerns to Southern California. Stay with NBC Palm Springs for updates. #BreakingNews #HeadTripFestival #Indio #CoachellaValley #TropicalStormRachel WeatherAlert CalvinHarris NBCPalmSprings
BREAKING NEWS: Thalia Hayden and Jerry Steffen break down the latest forecast for Tropical Storm Rachel as it moves through eastern Riverside County Sunday morning. The Coachella Valley could see more than an inch of rain, raising concerns about flooding. The heaviest rainfall is expected from midnight through noon Sunday, with showers tapering off by Sunday evening. Stay with NBC Palm Springs for the latest updates. #TropicalStormRachel #BreakingNews #CoachellaValley #PalmSprings #WeatherAlert FloodWarning SouthernCaliforniaWeather NBCPalmSprings ThaliaHayden JerrySteffen
🌧️ Tropical Storm Rachel is bringing the threat of heavy rain and flooding to the Coachella Valley. Thalia and Jerry break down the hour-by-hour forecast, with the heaviest rainfall expected from midnight through Sunday morning and more than an inch possible in parts of the Valley. Flood watches and warnings remain a concern, with showers expected to taper off by Sunday evening. Stay weather-aware and stay with NBC Palm Springs for the latest updates! ⛈️ #TropicalStormRachel #CoachellaValley #WeatherAlert #NBCPalmSprings
🌊 Tropical Storm Rachel is bringing dangerous surf, flooding and destruction to Southern California’s coast. In Long Beach, parts of the boardwalk have been ripped apart, while a badly damaged home is on the verge of collapse. Newport Beach has declared a local emergency after pounding waves flooded at least 10 blocks of the Balboa Peninsula. Officials are urging people to stay away as the threat continues. 🌧️ #HurricaneRachel #SouthernCalifornia #LongBeach #NewportBeach #CoachellaValley