US appeals court rules against Kalshi, affirms states can regulate prediction markets

A US appeals court has ruled against prediction market operator Kalshi, finding that individual states retain authority to regulate prediction markets, according to Al Jazeera.

The ruling adds to a divide among US appeals courts on the question of prediction market regulation, with different circuits having reached varying conclusions on the extent of state versus federal authority over these markets. The report noted that this inconsistency across courts opens the door to eventual review by the US Supreme Court.

Prediction markets, which allow users to trade on the outcomes of political, economic and other events, have expanded rapidly in recent years and drawn increasing regulatory scrutiny. Kalshi has been at the center of several legal disputes over whether such platforms fall under federal commodities regulation or are subject to state-level gambling and gaming laws.

The report did not specify which state's regulations were at issue in this particular case or the exact grounds on which the appeals court based its ruling. It also did not include a response from Kalshi to the decision.

The outcome is likely to be closely watched by other prediction market operators and state regulators as the broader legal question of jurisdiction over these platforms remains unresolved.