9th Circuit Court Rules Against Kalshi in Gambling Case

The 9th U.S. Circuit Court of Appeals has ruled that sports betting is not protected under the federal law that allows prediction market firms to operate, undermining a previous federal judge's injunction that blocked Arizona from prosecuting Kalshi for violating state gambling laws. This decision came from a case in Nevada, which directly challenges the rationale used by Judge Michael Liburdi, who had previously sided with Kalshi's interpretation of the Commodity Exchange Act. The appellate court concluded that sports events do not qualify as 'swaps' and thus are not protected by federal law. Judge Ryan Nelson stated that Congress did not intend to dismantle decades of sports gambling regulations when amending the Commodity Exchange Act. Arizona Attorney General Kris Mayes expressed that the ruling affirms states' authority to regulate gambling operations. The 9th Circuit's decision contrasts with an earlier ruling from the 3rd U.S. Circuit Court of Appeals, which had sided with Kalshi. The ruling may allow Arizona to resume its criminal case against Kalshi, which includes 20 counts related to gambling violations. The judges emphasized that any interpretation granting the Commodity Futures Trading Commission authority over sports betting would require clear congressional authorization, which has not been provided.