A Kalshi advertisement seen in Washington on March 27, 2026.Paul Lester | CNBC, the U.S. Court of Appeals for the Ninth Circuit rejected prediction market platforms’ requests for injunctive relief against the Nevada Gaming Control Board, concluding that sports-related event contracts are not a federally regulated derivative. The court rejected appeals by Kalshi and Crypto.com, two prediction market platforms, to prevent Nevada from stopping their operations that the state claims are gambling offerings outside the framework of the gaming control board. The court also ruled against Robinhood’s request for injunctive relief. That company also presents event contracts on its commercial platform. Under scrutiny were the platforms’ sports-related event contract offerings, which 44 states say are nothing more than sports betting. However, the platforms (and their federal regulator, the Commodity Futures Trading Commission) claim that all event contracts, regardless of subject matter, are swaps. Swaps are a type of derivative under the CFTC’s purview, and the agency claims it has exclusive jurisdiction to regulate all event contracts. The CFTC has even sued nine states to defend what it believes is its exclusive right to set rules for prediction markets. But the Ninth Circuit rejected that argument. “The sporting event contracts were not ‘swaps’ because they were sports bets,” the court stated in its ruling against Kalshi. The Nevada Attorney General’s office said the ruling was a major victory. “Kalshi sought to circumvent Nevada’s gambling laws by claiming that its sports betting products were federally regulated financial instruments outside the reach of state regulators,” the office’s deputy director of communications, Alcinia Whiters, said in a statement. “The Ninth Circuit rejected that argument and made clear what we have maintained from the beginning: Sports betting does not become something else simply because a company calls it an ‘event contract.’… Our office is proud to have upheld Nevada’s authority.” issue: The only exceptions in the statute are onions and movie box office receipts,” the spokesperson said in a statement. “The Ninth Circuit erred today when it invented a new, non-textual exception to the CEA,” referring to the Commodity Exchange Act, the law that details which contract events the CFTC can allow and disallow. Legal experts have widely expected to raise the question of sports-related event contracts, and whether state gaming regulators or the CFTC have the right to regulate them, will eventually reach the Supreme Court. That now seems very likely, as the 9th Circuit’s decision contradicts a ruling by the U.S. Court of Appeals for the Third Circuit in early April. In that case, the Third Circuit ruled that only the CFTC has jurisdiction to regulate sports-related event contracts. “Ultimately, this is the type of legal controversy or legal difference of opinion that will reach the Supreme Court.” Kalshi’s litigation chief, Jovy Dedaj, in a post on X wrote that the Ninth and Third Circuit decisions agreed that federal law prevents states from regulating federally licensed exchanges, but said The Ninth Circuit went too far in declaring sports-related event contracts not trades. It added that Congress gave the CFTC the power in the Commodity Exchange Act to determine whether “gaming” event contracts are contrary to the public interest, not states. In a statement, Robinhood said it plans to appeal the decision. Futures Commission registered with the CFTC,” a spokesperson said. Crypto.com did not respond to a request for comment. Meanwhile, shares of two online sportsbooks, DraftKings and Flutter Entertainment, the parent company of FanDuel, rose in response to the ruling. Both stocks have been hit in the past year by concerns that prediction markets will disrupt the industry, and the companies have rushed to bring their own prediction markets online. DraftKings rose 7%, while Flutter is up more than 6%. Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and a minority investment. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.
