Kalshi and Polymarket fail to block Nevada and Washington state gambling lawsuits, cases to proceed

Odaily Planet Daily News The U.S. Court of Appeals for the Ninth Circuit rejected requests from Kalshi and Polymarket, allowing gambling-related cases against the two prediction market platforms in Nevada and Washington state to move forward, and remanded the cases to state court.

The court ruled that the two companies failed to demonstrate that the cases should be under federal court jurisdiction. The platforms' assertion that the Commodity Exchange Act has preemptive effect is not sufficient to automatically establish federal jurisdiction.

Kalshi and Polymarket previously argued that contracts on events such as sports and politics are federal derivatives regulated by the CFTC, and that states have no authority to enforce gambling laws against them. However, Nevada and Washington state contend that such contracts constitute unlicensed gambling products.

This ruling highlights a growing divide among U.S. courts over whether prediction markets qualify as federally regulated swap contracts or as illegal gambling products under state law.