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Ninth Circuit Ruling on Prediction Markets Sets Stage for Supreme Court Showdown
Consumer Services · Casinos/Gaming · cnbc · 2026-08-28
HOOD, DKNG, FLUT
A federal appeals court ruled against Kalshi and other platforms, finding sports-related event contracts are bets rather than derivatives, creating a legal split.
What Happened
Appellate Court Decision: The Ninth Circuit Court of Appeals denied requests for injunctive relief from platforms like Kalshi, Crypto.com, and Robinhood regarding their sports-related event contracts. The court determined that these specific offerings constitute sports betting rather than derivatives, effectively rejecting the argument that they fall under federal jurisdiction.
Regulatory Jurisdiction Conflict: This ruling creates a significant circuit split, as it directly contradicts a recent decision by the Third Circuit Court of Appeals which favored the Commodity Futures Trading Commission's (CFTC) authority. The CFTC maintains that all event contracts are swaps under its exclusive regulatory purview, leading to ongoing legal battles with various state gaming boards.
Supreme Court Expectations: Legal scholars suggest that the conflicting rulings between the Ninth and Third Circuits make a Supreme Court intervention highly probable. The high court will likely need to resolve whether state gaming regulators or federal agencies hold the ultimate authority to oversee the burgeoning prediction market industry.
Market Reaction: Shares of major sportsbooks DraftKings and Flutter Entertainment saw significant gains following the news, rising 7% and 6% respectively. Investors reacted positively to the court's decision, which may curb the immediate competitive threat posed by prediction market platforms to traditional sports betting operators.