Ninth Circuit Upholds State Power Over Corporate Prediction Markets, Defying Federal Deregulation
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The U.S. Court of Appeals for the Ninth Circuit ruled that federal commodities-trading statutes do not override Nevada's progressive gambling regulations, delivering a blow to profit-driven prediction-market firms seeking to evade state oversight.
In a unanimous decision, the U.S. Court of Appeals for the Ninth Circuit affirmed that federal commodities-trading law does not trump Nevada’s robust gambling statutes when it comes to sports betting. This ruling, delivered on Friday, marks a significant setback for the prediction-market industry, which has been aggressively lobbying for loopholes to sidestep democratically enacted state regulations in pursuit of unchecked profits.
The decision stands in contrast to a prior ruling by the Third Circuit, which sided with corporate interests by denying New Jersey the right to regulate the prediction-market platform Kalshi. Such conflicting decisions among federal appellate courts highlight the ongoing struggle between state sovereignty and the relentless push by financial interests to erode local protections.
Currently, legal battles over the legitimacy of prediction markets are ongoing in about 20 states, as courts weigh whether these speculative platforms can operate outside the reach of state gambling laws designed to protect communities from exploitation.
"The Ninth Circuit’s opinion makes clear that federal commodities law does not preempt state gambling regulations," the court wrote, reinforcing the principle that states have the right to defend the public interest against corporate overreach.
This outcome may pave the way for a Supreme Court review, where the future of community protections against predatory financial schemes could be decided.