Ninth Circuit Rules Kalshi Sports Contracts Are Bets
Appeals court decision strips CFTC jurisdiction and points prediction markets toward Supreme Court
The Ninth Circuit Court of Appeals affirmed a lower court ruling this week, classifying Kalshi's sports event contracts as sports bets rather than financial "swaps" — stripping the Commodity Futures Trading Commission of exclusive jurisdiction and almost certainly forcing a Supreme Court showdown.
Why It Matters
Prediction markets have operated in a legal grey zone, with Kalshi arguing its sports contracts qualify as swaps under CFTC oversight — a classification that would sidestep state-by-state sports betting regulation entirely. The Ninth Circuit's decision, reported by Legal Sports Report, slams that door shut for now. If the Supreme Court takes the case, its ruling could redraw the boundary between financial derivatives and gambling for every prediction market operator in the United States. For crypto-native prediction platforms already eyeing U.S. expansion, the outcome could determine whether federal or state regulators hold the keys.
Context
Kalshi has fought to position sports event contracts as legitimate financial instruments since the CFTC initially blocked their launch. A lower court sided against Kalshi's swap argument, and as of August 2026 the Ninth Circuit has now upheld that position. The stakes extend well beyond Kalshi: competitors including Polymarket and any exchange trading event contracts on U.S. sports face the same regulatory uncertainty.
What's Next
Kalshi's legal team is widely expected to file a petition for certiorari to the Supreme Court; if the court accepts the case, oral arguments would likely fall in the 2027 term. Until then, sports prediction contracts remain in legal limbo across U.S. jurisdictions.
Gambling involves financial risk. Past regulatory outcomes do not predict future decisions.
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