Ninth Circuit Rules Sports Prediction Markets Are Gambling

The U.S. Court of Appeals for the 9th Circuit rejected requests for injunctive relief from prediction market platforms Kalshi, Crypto.com, and Robinhood, ruling that sports-related event contracts constitute sports bets rather than derivatives regulated by the federal government. This decision enables the Nevada Gaming Control Board to continue halting operations it classifies as unauthorized gambling.

The ruling creates a circuit split by contradicting a previous decision from the Third Circuit Court of Appeals, a development legal experts expect will lead to a Supreme Court challenge. The United States Commodity Futures Trading Commission argued that the court created an atextual exception to the Commodity Exchange Act, as the agency claims exclusive jurisdiction over all event contracts as swaps.

Robinhood announced plans to appeal the decision. In the wake of the ruling, shares of online sportsbooks DraftKings and Flutter Entertainment rose, as the court's decision limits the ability of prediction markets to disrupt the established sports betting industry.