Ninth Circuit Says Federal Commodities Law Does Not Override Nevada Gambling Regulations on Sports Betting
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The U.S. Court of Appeals for the Ninth Circuit ruled that federal commodities-trading statutes do not preempt Nevada's gambling law regarding sports wagers, marking a setback for prediction-market firms.
The U.S. Court of Appeals for the Ninth Circuit issued a unanimous decision stating that federal commodities-trading law does not supersede Nevada's gambling statutes when it comes to placing wagers on sports events. The ruling, handed down on Friday, represents the largest defeat yet for the prediction-market industry, which has been seeking clarification on how its contracts fit within existing gambling regulations.
The decision follows a contrasting ruling by the Third Circuit, which held that New Jersey could not regulate the prediction-market platform Kalshi. Divergent rulings among federal appellate courts often influence whether the Supreme Court will agree to hear a case.
Legal challenges over the status of prediction markets are pending in roughly 20 states, as courts assess whether such markets can operate independently of state gambling laws.
"The Ninth Circuit’s opinion makes clear that federal commodities law does not preempt state gambling regulations," the court wrote.
The outcome may set the stage for a future Supreme Court review that could resolve the nationwide dispute.