A federal appeals court has backed Nevada’s authority to ban Kalshi’s sports event contracts, intensifying the legal and regulatory fight over prediction markets and raising new concerns for tribal gaming revenue
Three political candidates have been fined and suspended for betting on their own races, but the bigger shock came when the Ninth Circuit Court of Appeals handed Nevada regulators a decisive win in their battle against unlicensed prediction markets. The court’s ruling has put Kalshi’s sports event contracts under direct fire, with the Nevada Gaming Control Board (NGCB) now wielding clear authority to keep these products out of the state’s regulated gambling market.
Federal Court Sides With Nevada
The U.S. Court of Appeals for the Ninth Circuit ruled unanimously that Kalshi’s interpretation of the Commodity Exchange Act was too broad, rejecting the idea that federal commodity regulation could override state gambling laws. The court also upheld a lower court’s decision allowing the NGCB to ban Kalshi from offering sports event contracts in Nevada. NGCB chairman Mike Dreitzer wasted no time making the agency’s position clear: if you risk money on the outcome of a sporting event, it’s a bet, regardless of what you call it. Dreitzer emphasized that the Commodity Futures Trading Commission (CFTC) is not a national gambling regulator and cannot shield prediction markets from state oversight.
Tribal Gaming Revenue at Stake
Tribal leaders are now rallying behind New Jersey’s push to overturn the appeals court decision at the U.S. Supreme Court. Rebecca George, executive director of the Washington Indian Gaming Association, described the rapid expansion of prediction markets as a direct threat to tribal and state gaming revenue. She pointed to a recent King County court order forcing Kalshi to halt event contracts and advertising in Washington, calling the situation unprecedented in its impact on tribal regulatory authority. George stressed that gambling remains a states’ rights issue and warned that every dollar spent on unlicensed prediction markets comes at the expense of tribal operations and state lotteries.
Kalshi Fines and Suspensions
Kalshi’s own enforcement actions have exposed the risks of self-dealing in prediction markets. The company fined Stephen Cloobeck, a former California gubernatorial candidate, $31,770 for buying $10,000 worth of contracts tied to his own abandoned campaign. In North Carolina, Republican Laurie Buckhout was penalized $2,589.96 and suspended for three years after betting less than $1,000 on her own U.S. House race. Maine’s Ben Midgley, who finished second in the Republican gubernatorial primary, received a $5,430.30 fine and a three-year suspension for similar conduct. All three candidates cooperated with Kalshi’s investigations, but the incidents highlight the platform’s ongoing struggle to enforce its own rules and maintain integrity.
Policy and Consumer Protection Challenges
For Nevada regulators, the legal victory is only part of the story. Dreitzer has repeatedly warned that strong regulation and consumer protection must remain central as new betting products emerge. He raised concerns about underage gambling, especially among 18- to 20-year-olds who may be lured by the promise of “investing” in sports outcomes. Dreitzer argued that relabeling bets as investments is misleading and potentially harmful, especially when losses can affect essentials like tuition or rent. The NGCB’s stance is clear: Nevada will not normalize what it sees as illegal conduct, and no amount of rebranding will change the underlying reality of sports betting. The regulatory fight is far from over, with tribal leaders and state officials preparing for a possible Supreme Court showdown. As reported earlier, Kalshi’s expansion into mainstream sports has only intensified scrutiny from regulators and market stakeholders.
Event contracts, sometimes called prediction-market contracts, allow users to buy and sell positions on the outcome of real-world events, including sports, elections, and entertainment. While some platforms argue these are financial products regulated by the CFTC, most state regulators treat them as gambling when money is risked on uncertain outcomes. The distinction between a regulated sportsbook wager and an event contract remains at the heart of ongoing legal and policy battles, with state and tribal authorities determined to defend their regulatory turf and revenue streams.
