Appeals Court Says Prediction Markets Should Be Regulated as Gambling
An appeals court has ruled that prediction markets should be regulated as gambling, allowing states to oversee platforms like Kalshi rather than treating their contracts as federally regulated swaps. The court found that Kalshi's sports event contracts are bets, not swaps, making them subject to state gambling laws. That outcome directly contradicted an earlier appeals court decision, creating a judicial split that federal regulators said should be resolved by the Supreme Court. The dispute sits within a broader political battle over Kalshi, Polymarket, and similar venues that has drawn in the Trump administration, the president's son, and nearly every state attorney general. Operators should read the ruling as a state-level compliance turn, not a settled federal framework, until higher courts clarify the split.
Appeals Court Says Prediction Markets Should Be Regulated as Gambling
Prediction Markets Should Be Regulated as Gambling, Appeals Court Says. The outcome contradicted an earlier appeals court decision.
Key takeaway
A federal appeals court classified Kalshi sports event contracts as gambling bets subject to state law, not federal swaps.
What happened
An appeals court ruled that states can regulate prediction markets, finding Kalshi's sports event contracts are bets rather than swaps and therefore subject to state gambling laws, according to reporting by Lauren McCarthy in the New York Times.
The decision contradicted an earlier appeals court ruling on the same issue. Federal regulators said the split between the two outcomes called for resolution by the Supreme Court, leaving the regulatory status of Kalshi, Polymarket, and similar platforms unsettled.
Evidence
An appeals court ruled states can regulate prediction markets and classified Kalshi sports event contracts as bets, not swaps.
Techmeme · attributed
An appeals court rules states can regulate prediction markets, finding Kalshi's sports event contracts are bets, not swaps, and subject to state gambling laws
The appeals court outcome contradicted an earlier appeals court decision.
NYTimes Technology · attributed
The outcome contradicted an earlier appeals court decision.
Federal regulators said the split rulings called for resolution by the Supreme Court.
NYTimes Technology · attributed
Federal regulators said the split rulings called for resolution by the Supreme Court.
The Kalshi and Polymarket legal dispute has drawn in the Trump administration, the president's son, and nearly every state attorney general.
NYTimes Technology · attributed
A legal dispute over the future of Kalshi, Polymarket and others has drawn in the Trump administration, the president's son and nearly every state attorney general.
Why it matters
Split appeals-court rulings leave prediction-market regulation unsettled until the Supreme Court or federal regulators weigh in.
Limits and uncertainties
The packet does not specify which appeals court issued the ruling, the vote margin, or which states' laws immediately apply.
Federal regulators' call for Supreme Court resolution is reported but no timeline or filing is described.
Practical implications
Prediction-market operators may need to reassess state gambling-law compliance for sports event contracts rather than relying on a federal swaps framework.
Builders integrating Kalshi or similar venues should treat jurisdictional rules as unsettled until the Supreme Court or regulators resolve the split.
What to watch
Whether the Supreme Court takes up the split appeals-court rulings on prediction-market regulation.
State enforcement actions against Kalshi, Polymarket, or similar platforms following the gambling classification.
