US Appeals Court Rules Kalshi Sports Contracts Are Not Swaps in State Preemption Case
The Ninth Circuit ruled that Kalshi sports prediction contracts are not swaps, dissolving an injunction and creating a federal circuit split.
The US Court of Appeals for the Ninth Circuit ruled that Kalshi's sports prediction contracts do not qualify as swaps under federal law, affirming the dissolution of an injunction against the Nevada Gaming Control Board.
The panel concluded that federal commodities regulation does not preempt state gaming laws in this instance. This decision directly contradicts a previous finding by the Third Circuit, establishing a formal circuit split regarding the classification of event-based derivatives.
The ruling introduces regulatory uncertainty for US-based prediction markets, potentially requiring operators to navigate state-by-state gaming compliance unless the Supreme Court or Congress resolves the jurisdictional conflict.
Key takeaways
- The Ninth Circuit determined that Kalshi's sports event contracts are not federal swaps.
- The decision creates a federal circuit split with the Third Circuit over state preemption.
- Prediction market platforms face potential regulatory hurdles under state gaming laws.