On August 28, 2026, the Ninth Circuit Court of Appeals ruled against prediction market platforms in their ongoing legal dispute with state regulators, determining that sports-related event contracts are not 'swaps' and therefore not regulated as derivatives at the federal level [1]. This decision directly impacts platforms such as Kalshi, Crypto.com, and Robinhood, all of which had sought injunctive relief to prevent the Nevada Gaming Control Board from halting their operations, which the state classifies as gambling outside its regulatory framework [1].
The ruling stands in contrast to an earlier decision by the Third Circuit Court of Appeals in April, which found that all event contracts are swaps and thus fall under the Commodity Futures Trading Commission's (CFTC) jurisdiction [1]. This circuit split sets up a likely Supreme Court review to resolve whether state gaming regulators or the CFTC have authority over sports-related event contracts [1].
The CFTC, which has sued nine states to assert its exclusive right to regulate prediction markets, maintains that all event contracts, regardless of subject matter, are swaps except for statutory exceptions like onions and movie box office receipts [1]. In a statement to CNBC, a CFTC spokesperson criticized the Ninth Circuit's decision, arguing that the court 'invented a new and atextual exception to the CEA' (Commodity Exchange Act) and misapplied the law [1].
Legal experts have widely anticipated that the Supreme Court will ultimately decide the regulatory fate of sports-related event contracts, given the conflicting appellate court decisions and the high stakes for both state regulators and the federal agency [1].
CONCLUSION
The Ninth Circuit's ruling against prediction market platforms intensifies the regulatory uncertainty surrounding sports-related event contracts and increases the likelihood of Supreme Court intervention. The outcome will have significant implications for the future of prediction markets, with both state and federal regulators vying for control.