Ninth Circuit Rejects 3 Prediction-Market Appeals as Nevada Win Sets Up Supreme Court Fight
Updated
Updated · CNBC · Aug 28
Ninth Circuit Rejects 3 Prediction-Market Appeals as Nevada Win Sets Up Supreme Court Fight
3 articles · Updated · CNBC · Aug 28
Summary
The Ninth Circuit denied injunctive relief for Kalshi, Crypto.com and Robinhood, allowing Nevada to keep blocking their sports-event contracts while the case proceeds.
The court said those contracts are sports bets, not CFTC-regulated swaps, rejecting the agency's argument that event contracts fall under its exclusive federal authority.
That ruling clashes with an April Third Circuit decision backing CFTC jurisdiction, creating a circuit split that legal experts say makes Supreme Court review likely.
Robinhood said it will appeal, while Nevada called the decision a major victory for state gaming authority; Kalshi and Crypto.com did not immediately comment.
DraftKings rose 7% and Flutter gained more than 6% as investors welcomed a setback for prediction markets that sportsbooks see as a competitive threat.
Why did traditional sportsbook stocks surge after the Ninth Circuit effectively labeled prediction market contracts as illegal sports bets?
With the August 2026 geofencing deadline passed, will the Supreme Court finally decide if prediction markets are protected swaps or illegal gambling?
Can federal regulators save prediction platforms from massive state fines, or will the growing circuit split destroy this emerging financial market?
The $64 Billion Prediction Market Showdown: Supreme Court, State Regulators, and the Fight Over Gambling vs. Finance
Overview
In August 2026, the Ninth Circuit ruled that prediction markets like Kalshi and Robinhood are unlicensed sportsbooks, allowing Nevada to enforce gambling laws against them. This decision clashed with a previous Third Circuit ruling, creating a direct circuit split and setting the stage for a Supreme Court showdown. The platforms’ failure to get CFTC approval for sports contracts meant they could not claim federal protection. As regulators and lawmakers increased pressure, platforms responded with strict compliance measures, while insider trading scandals led major financial firms to restrict employee trading. Meanwhile, institutional interest grew, but regulatory uncertainty chilled broader financial innovation.