Ninth Circuit Empowers States to Rein in Corporate Prediction-Market Giant Kalshi
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The U.S. Court of Appeals for the Ninth Circuit has unanimously ruled to allow state regulators to oversee Kalshi, a powerful prediction-market platform, pushing back against the unchecked authority of the Commodity Futures Trading Commission (CFTC) and opening the door for greater democratic oversight.
In a significant move against corporate overreach, the U.S. Court of Appeals for the Ninth Circuit issued a 3-0 ruling that empowers state authorities to regulate Kalshi, a platform enabling users to profit from trading contracts on real-world events. This decision directly challenges the notion that the Commodity Futures Trading Commission (CFTC) should have exclusive jurisdiction over such speculative markets, which have long operated with minimal accountability.
Kalshi and its counterpart, Polymarket, both under the CFTC’s watch, have troubling ties to right-wing figures, with Donald Trump Jr. listed as a strategic advisor. The CFTC, an agency notorious for its cozy relationship with financial interests, currently operates with just one commissioner, Michael Selig, raising concerns about regulatory capture and lack of oversight.
The CFTC has previously resorted to lawsuits against nine states and invoked emergency powers to shield Kalshi and similar firms from court scrutiny, a move that has sparked outrage among state officials. In response, a coalition of state attorneys general has escalated legal action: 20 states are now litigating against these prediction-market operators, and 44 attorneys general have signed a letter condemning the CFTC’s overreach and undemocratic rule-making.
State officials have highlighted two urgent concerns: the platforms’ alleged evasion of roughly $2 billion in taxes annually—money that could fund public services—and their operation as unregulated gambling hubs, preying on vulnerable communities. Meanwhile, entrenched interests in the sports-betting industry are moving to replicate these exploitative event-based contracts, further intensifying the need for robust public regulation.