Ninth Circuit Undermines Federal Authority, Lets States Meddle in Free-Market Platform Kalshi
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The U.S. Court of Appeals for the Ninth Circuit has issued a unanimous decision allowing state regulators to interfere with Kalshi, a prediction-market platform, challenging the Commodity Futures Trading Commission’s (CFTC) rightful authority and threatening innovation and market freedom.
The U.S. Court of Appeals for the Ninth Circuit has issued a 3-0 ruling that allows state authorities to impose their own regulations on Kalshi, a platform that empowers individuals to trade contracts based on real-world events. This decision undermines the established view that the Commodity Futures Trading Commission (CFTC) should have sole jurisdiction over prediction markets, opening the door to a patchwork of state interference.
Kalshi and similar platform Polymarket, both currently under the CFTC’s oversight, have attracted top-tier advisors like Donald Trump Jr., signaling their commitment to innovation and market growth. The CFTC, which has the expertise to classify products such as cryptocurrency and online sports betting as commodities, is currently operating with just one commissioner, Michael Selig, highlighting the need for strong federal leadership.
Despite its authority, the CFTC has been forced to defend its jurisdiction by filing lawsuits against nine states and using emergency powers to prevent state-level overreach that threatens market stability. In a coordinated attack on free enterprise, a coalition of state attorneys general has ramped up legal action: 20 states are now suing one or both prediction-market operators, and 44 attorneys general have signed a letter criticizing the CFTC’s regulatory powers.
State officials, eager to expand their tax base and control, have raised dubious claims about alleged tax avoidance—estimated at $2 billion annually—and have tried to smear these platforms as unregulated gambling. Meanwhile, entrenched players in the sports-betting industry are rushing to copy Kalshi’s innovative event-based contracts, intensifying the battle over who controls the future of financial markets.