Kalshi and Polymarket Lose Legal Bids to Halt State Gambling Cases

The Ninth Circuit Court of Appeals has dismissed bids by Kalshi and Polymarket to halt ongoing gambling-related cases in Nevada and Washington. The court ruled that federal oversight of derivatives does not protect these prediction market platforms from state-level gaming regulations.

Kalshi and Polymarket had argued that their operations fall under federal derivatives regulation, which would exempt them from state gambling laws. However, the court disagreed, stating that state enforcement actions can proceed. This decision underscores the complex regulatory landscape for crypto-based prediction markets, which blend elements of gambling and financial derivatives.

The ruling could have significant implications for how prediction markets operate in the U.S. If state regulators classify these platforms as gambling operations, they may face stricter regulations, higher compliance costs, or even potential shutdowns. For users, this could mean changes in accessibility or the types of predictions offered on these platforms.

Moving forward, both Kalshi and Polymarket may need to adapt their business models to comply with state regulations or continue to fight the rulings in other legal venues. Users of these platforms should stay informed about any changes in service availability or terms of use that may result from these legal developments.