APPEALS COURT UPHOLDS NEVADA'S RIGHT TO REGULATE KALSHI

The 9th Circuit Court of Appeals sided with Nevada in the regulatory dispute, rejecting Kalshi's legal challenge to state oversight. The court determined that Kalshi's financial instruments are functionally gambling products regardless of their technical classification. Kalshi operates a platform for trading predictions on future events. The company argued its offerings qualified as swaps—derivatives contracts—and therefore fell outside traditional gambling regulations. Nevada and other states disputed this characterization, asserting the platform required state gaming licenses. The ruling affirms states' authority to regulate prediction markets under existing gambling frameworks. The decision potentially enables other states to pursue similar enforcement actions. Kalshi has been operating without state licenses, claiming federal exemptions under commodity trading rules. The outcome represents a significant regulatory setback for the prediction market industry, which has sought to operate without traditional gambling restrictions. The ruling clarifies that functional gambling cannot simply be relabeled as financial derivatives to evade state oversight.