Court Rules Kalshi Prediction Market Sports Bets Are Gambling, Not Swaps

In a major regulatory setback for prediction markets, a federal court ruled that sports-related event contracts offered on Kalshi's platform fall under state gaming and gambling laws rather than federally protected commodity swaps. The decision prevents Kalshi from bypassing state licensing requirements in jurisdictions with strict sports betting bans.

Kalshi argued that its binary event contracts are financial derivative swaps regulated exclusively by the Commodity Futures Trading Commission (CFTC). The court rejected this characterization, ruling that placing financial wagers on athletic events directly triggers state gaming enforcement authority.