After Kalshi Appeals, Prediction Market Compliance Dispute May Head to US Supreme Court

On Thursday, April 17, the U.S. Ninth Circuit Court of Appeals held oral arguments between lawyers for prediction market platform Kalshi and Nevada authorities over the state’s ban on the platform’s event contracts. The appeal stems from a lower court ruling that barred Kalshi from offering certain event-based contracts in Nevada because the platform lacked a required license. Both the appellate judge overseeing the arguments and Kalshi’s counsel noted multiple state-level enforcement actions against Kalshi and other prediction markets—including criminal charges filed in Arizona. Last week, however, a federal court blocked Arizona authorities from enforcing the state’s gambling law against Kalshi’s event contracts. “Existing precedent strongly suggests we should avoid state and federal courts simultaneously considering the exact same issue—risking conflicting rulings,” said Colleen Sinzdak, Kalshi’s attorney. Kalshi’s core argument is that its event contracts qualify as “futures” trades under the Commodity Futures Trading Commission (CFTC)’s jurisdiction, not state gambling regulators. CFTC Chair Michael Selig backed this position in Crypto.com’s prediction market case against Nevada. Coinbase Chief Legal Officer Paul Grewal predicted the case could reach the U.S. Supreme Court. “Oral argument questions aren’t a reliable sign of the court’s leanings, but I stand by my long-held prediction that the Supreme Court will rule on whether sports contracts in designated contract markets fall under the CFTC’s exclusive jurisdiction over futures trades.”