(The Center Square) – An $11 billion prediction markets company appealed a federal judge’s ruling that would stop it from offering sports betting lines.
The ruling goes against recent court decisions in favor of Kalshi. And it adds yet another twist to the legal argument over the regulatory status of prediction markets since the Trump administration regained the Oval Office.
“ This is an issue that is hotly debated clearly,” Goodwin law firm partner Andrew Kim, who specializes in gaming and appellate courts, told The Center Square. “There is no obvious right answer in terms of precedent. So there’s going to be push and pull – momentum going in both directions.”
This latest legal push against prediction markets dissolved an April injunction decision that had allowed Kalshi to continue offering sports betting lines in Nevada until a final decision was reached on their regulation status. Less than a year later the same judge, U.S. District Judge Andrew Gordon reversed his own decision.
The core of the dispute centers around what kind of market Kalshi and other prediction markets are. Currently, they have successfully argued their case to be regulated by the U.S. Commodity Futures Trading Commission, which means the companies don’t have to follow the strict regulations or tax laws of the traditional gambling industry.
The latest case in Nevada flipped this to say that Kalshi must follow Nevada gaming rules, as are governed by the Nevada Gaming Control Board. Judge Gordon’s change in opinion from April was in reaction to Kalshi offering new sports betting lines that allow for more specific betting lines such as pre-built sports parlays and player prop bets in the NFL.
Kalshi argued in the court filing that because bets take place between individuals and not Kalshi itself, it was subject to federal commodity rules, not state gaming regulation. Kalshi has marketed itself as “legalized sports betting in all 50 states.”
Kalshi did not respond to a Center Square request for comment.
Kim cautioned that the decision was far from a decisive blow against prediction markets.
“ It is not precedent by any means, except in Judge Gordon’s court,” said the Goodwin law firm partner. He went on to use sports metaphors to discuss the ruling on sports bettings.
“This is a years-long fight, and we’re just now maybe entering the second quarter of a four-quarter game,” said Kim. “It’s kind of like when you watch an NBA game. You look at the score, but we all know it doesn’t really matter until the last five minutes of the fourth quarter.”
Sports gambling markets celebrated the decision, with notable gains for both publicly traded DraftKings and FanDuel.
Kalshi immediately filed an emergency motion to appeal the Nevada court’s decision.
A similar battle is taking place across the country as courts struggle to fit prediction markets into their regulatory rules.
There has been speculation around if or when the prediction markets issue could find its way to the U.S. Supreme Court.
Kim said he thought it was more likely than not the Supreme Court would take it up if the lower courts continued to be contradictory over the issue. “Maybe the court will want a case to be fully baked before it takes it up, and that could be three or four years from now … I think the earliest we are looking at the court to be able to potentially weigh in is probably the middle to end of next year.”
