Ninth Circuit ruling clouds prediction market sports contracts
A Ninth Circuit ruling is creating uncertainty for prediction markets that offer sports event contracts, according to a Manatt analysis published September 6. The legal development raises questions about the regulatory status of such contracts under federal and state law. The ruling follows earlier Ninth Circuit action letting Nevada regulate Kalshi as gambling. Law360 published a broader analysis of prediction market litigation after the circuit ruling, though its full text was not available.
The Ninth Circuit's stance shrinks the zone where CFTC registration protects contract validity. Kalshi must now geofence Nevada or face state gambling enforcement. Connecticut already sued. New Jersey petitioned the Supreme Court. Each state filing emboldens the next attorney general. Kalshi's legal spend compounds across parallel cases.
Polymarket and other CFTC-registered platforms face identical exposure because the reasoning reaches any venue offering sports-linked contracts. Traders hold positions whose legality shifts with geography, not regulation. The circuit split raises odds of Supreme Court review, but cert grants are rare and state bans accumulate while any federal timeline stretches across months of uncertainty.