Ninth Circuit Backs States on Prediction Markets in 3-0 Ruling as Nevada Casinos Press Crackdown
Updated
Updated · CNN · Aug 28
Ninth Circuit Backs States on Prediction Markets in 3-0 Ruling as Nevada Casinos Press Crackdown
3 articles · Updated · CNN · Aug 28
Summary
A 3-0 Ninth Circuit panel handed Nevada and casino groups their biggest win yet, ruling Friday that states can treat sports-focused prediction platforms like Kalshi as gambling subject to state regulation.
The 50-page opinion rejected Kalshi’s claim that federal commodities law preempts state gaming rules, saying "placing sports bets, even when called by another name, is still gambling" and that the CFTC "is not a national gambling regulator."
That ruling strengthens a broader push already spreading from Connecticut to Wisconsin, while 44 state attorneys general, tribal gaming groups and bipartisan lawmakers have moved this summer to curb the industry.
Casinos are escalating because sports now dominate the business: about 78% of Kalshi’s roughly $26 billion monthly volume and 99% of Polymarket’s more than $3 billion US volume came from sports and parlays.
The fight is heading toward a likely Supreme Court showdown, with states defending tax revenue and licensing regimes against a federally licensed market the Trump-aligned CFTC continues to support.
Why did traditional sportsbook stocks surge after the Ninth Circuit effectively labeled prediction market contracts as illegal sports bets?
With the August 2026 geofencing deadline passed, will the Supreme Court finally decide if prediction markets are protected swaps or illegal gambling?
Can federal regulators save prediction platforms from massive state fines, or will the growing circuit split destroy this emerging financial market?
The $64 Billion Prediction Market Showdown: Supreme Court, State Regulators, and the Fight Over Gambling vs. Finance
Overview
In August 2026, the Ninth Circuit ruled that prediction markets like Kalshi and Robinhood are unlicensed sportsbooks, allowing Nevada to enforce gambling laws against them. This decision clashed with a previous Third Circuit ruling, creating a direct circuit split and setting the stage for a Supreme Court showdown. The platforms’ failure to get CFTC approval for sports contracts meant they could not claim federal protection. As regulators and lawmakers increased pressure, platforms responded with strict compliance measures, while insider trading scandals led major financial firms to restrict employee trading. Meanwhile, institutional interest grew, but regulatory uncertainty chilled broader financial innovation.