A federal appeals court delivered a decisive victory for state regulators on Friday, holding that prediction‑market platforms can be treated as gambling under state law. The 3‑0 decision came from the Ninth Circuit Court of Appeals, a panel composed entirely of judges appointed by President Trump.
Background of the case
The lawsuit originated in Nevada, where the state’s gaming commission sought to ban the Kalshi prediction‑market site. Kalshi and similar platforms such as Polymarket have operated as federally regulated financial exchanges, arguing that their services are distinct from traditional gambling.
State officials, however, contend that these platforms allow users to wager on the outcome of real‑world events and therefore should fall under state gambling statutes and be subject to state taxes.
Impact of the ruling
The Ninth Circuit’s opinion affirms the authority of states to apply their own gaming regulations to prediction‑market sites. Legal experts say the decision is the most substantial appellate win for states to date, though several related lawsuits remain pending across the country.
“This ruling clarifies that states retain the power to protect their citizens from unregulated wagering activities,” said a Nevada attorney general spokesperson. “It also ensures that any revenue generated by these platforms can be taxed appropriately.”
Broader legal landscape
The case adds to a growing split among federal appellate courts. Earlier this year, the Third Circuit Court of Appeals sided with prediction‑market operators, blocking New Jersey’s attempt to enforce its state gaming laws against the same companies. The divergent rulings suggest that the issue may ultimately be resolved by the Supreme Court.
Both sides argue that the outcome will have far‑reaching consequences for the burgeoning prediction‑market industry, which has attracted billions of dollars in trading volume. Proponents claim the platforms provide valuable market‑based information, while critics warn they can facilitate speculative gambling, especially among younger participants.
Administration’s stance
The Trump administration has consistently supported the view that prediction‑market platforms operate as financial exchanges and should be regulated at the federal level. The administration’s backing of the Nevada regulators in this case underscores its commitment to state‑level oversight when it aligns with broader policy goals.
“Protecting American families from unchecked gambling is a priority for this administration,” a White House spokesperson said. “We welcome courts that recognize the importance of state authority in safeguarding our citizens.”
What’s next?
With the Ninth Circuit’s decision, states like Nevada now have a clear judicial precedent to pursue enforcement actions against prediction‑market operators. Meanwhile, pending cases in other jurisdictions may prompt further appellate rulings, potentially setting the stage for a Supreme Court review.
Industry observers will be watching how the ruling influences market participation, especially among younger traders who have driven recent growth. The balance between innovation and consumer protection remains a central theme as the legal debate continues.
Original reporting: KTVZ (Central Oregon) — read the source article.
