Ninth Circuit rules states may regulate prediction-market platform Kalshi

The U.S. Court of Appeals for the Ninth Circuit issued a 3-0 ruling that permits state authorities to regulate Kalshi, a platform that allows users to trade contracts based on real-world events. The decision challenges the view that the Commodity Futures Trading Commission (CFTC) alone has jurisdiction over such prediction markets.

Kalshi and a similar platform, Polymarket, are currently overseen by the CFTC, which traditionally regulates futures and other derivatives. Both companies have listed Donald Trump Jr. as a strategic advisor. The CFTC, which has authority to classify various products—including cryptocurrency and online sports betting—as commodities, is presently operating with a single commissioner, Michael Selig.

The agency has previously filed lawsuits against nine states and invoked emergency powers to direct Kalshi and related firms to disregard certain court orders. In response, a coalition of state attorneys general has intensified legal actions: 20 states are involved in litigation against one or both prediction-market operators, and 44 attorneys general signed a letter criticizing the CFTC’s rule-making authority.

State officials have cited two primary concerns: the companies’ alleged tax avoidance, estimated at roughly $2 billion annually, and the perception that the platforms function as unregulated gambling venues. Industry competitors in the sports-betting sector have also begun offering similar event-based contracts, intensifying the regulatory debate.