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August 28, 2026 / 5:26 PM EDT
/ CBS News
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A federal appeals court on Friday rejected Kalshi's efforts to stop Nevada from regulating speculation on sporting events on its platform, handing states an important win in the battle over which level of government has authority to oversee the rapidly growing prediction-markets business.The 9th Circuit Court of Appeals said Kalshi failed to show that the 1936 Commodity Exchange Act, which regulates commodity futures trading, preempts Nevada gambling laws and bars the state from regulating wagers related to sporting events. Those prediction market contracts are not federally regulated "swaps" but rather sports bets, the court said."The substance of the sports event contracts offered on Kalshi's DCM [designated contract market] is sports gambling, regardless of whether Kalshi calls them swaps," the court ruled.State and federal turf warStates are locked in an ongoing legal fight with the federal government over which level of government has primary regulatory oversight of prediction markets, which allow users to bet on the outcomes of sports, elections and many other events. Roughly 20 states are involved in litigation over prediction markets, and experts say the battle is likely to wind its way to the Supreme Court.A separate decision in April reached a different conclusion than Friday's decision, with the 3rd U.S. Circuit Court of Appeals ruling that the Commodity Futures Trading Commission, a government agency that regulates derivatives markets, has exclusive control over sports-related event contracts on Kalshi."The 9th Circuit agreed with the 3rd Circuit on a fundamental point: Federal law prevents states from regulating trading on a federally licensed exchange, like Kalshi," Kalshi spokesperson Dani Lever said in an email. "Despite the 9th 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."
