Kalshi and Polymarket Fail to Block Nevada and Washington State Gambling Lawsuits, Cases to Proceed

Odaily reported that the U.S. Court of Appeals for the Ninth Circuit denied requests by 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 back to state courts.

The court held that the companies failed to demonstrate that the cases should be under federal jurisdiction. The mere assertion by the platforms that the Commodity Exchange Act preempts state law is not sufficient to automatically establish federal jurisdiction.

Kalshi and Polymarket had previously argued that contracts on events like sports and politics are federal derivatives regulated by the CFTC, and that state authorities have no right 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 represent federally regulated swap contracts or illegal gambling products under state law.