States have tried to wrangle prediction markets offering sports-related contracts under their regulatory frameworks since they started taking off after the 2024 election, arguing that these markets are competing with state gambling platforms and offering identical products to gambling sites and apps. For many states, the issue is that federally regulated platforms do not pay state taxes, while still competing with state-regulated platforms. Another major point of contention is the fact that prediction markets often offer their products to people as young as 18, rather than 21, like most state gambling operators.
In Friday’s ruling, the three-judge panel said it agreed that Kalshi did have the right to bring a case, but disagreed that the products in question were federally regulated swaps.
“While we agree with Kalshi that its sports-event contracts are conditioned on the occurrence of ‘event[s],’ we conclude that Kalshi’s contracts…
