The landscape of prediction markets has shifted dramatically with the Ninth Circuit's recent ruling against Kalshi, potentially influencing legal battles across the country. This decision not only impacts Nevada but also resonates in other states, as litigants reference it in ongoing cases. New Jersey, for instance, is racing against a September 3 deadline to appeal to the Supreme Court.
As the football season approaches, operators are gearing up, coinciding with the American Gaming Association’s Responsible Gaming Education Month this September.
Key Gambling Developments This Week
Ninth Circuit Ruling Influences Other Cases
The immediate aftermath of Friday's ruling raises questions about how other states and litigants will leverage this decision in their prediction market cases. Already, officials in Rhode Island and Illinois have cited the Ninth Circuit's ruling as a reference point.
This ruling could have significant implications for cases within the Ninth Circuit itself. An appeal involving Arizona, Kalshi, and the CFTC was paused pending the Nevada ruling, and Washington alongside Crypto.com has also agreed to delay their case until the Nevada dispute is settled.
Furthermore, the ruling strengthens the arguments of tribal entities. The Ninth Circuit's dismissal of Kalshi’s interpretation of federal law underscores the traditional authority of states and tribes in regulating gambling, referencing the Indian Gaming Regulatory Act.
Attention is also drawn to the CFTC, which had supported Kalshi as an amicus curiae. The court dismissed part of the agency’s interpretation of Rule 40.11, even as the CFTC seeks to amend this regulation.
New Jersey's Supreme Court Deadline Approaches
The Ninth Circuit's ruling has created a notable division among federal appellate courts. Earlier this year, the Third Circuit ruled in favor of Kalshi in a New Jersey case, while the Ninth Circuit has now sided with Nevada regarding Kalshi’s sports contracts.
This timing is crucial, as New Jersey has until September 3 to request a Supreme Court review of the Third Circuit's decision. The existing split could strengthen their case for appeal.
However, it remains uncertain whether the Supreme Court will act on the case immediately, as other appeals are still pending and may influence the judicial landscape before any decision is made.
Upcoming Decisions in New York and Connecticut
New York is poised to receive a ruling on its attempt to move its enforcement case against Kalshi back to state court, which could happen as soon as this week.
Connecticut may also take a similar route, as Kalshi recently moved the state's new enforcement lawsuit to federal court, prompting Connecticut to potentially file its own motion to remand.
Sports Partnerships Thrive Amid Legal Challenges
Despite ongoing legal pressures, prediction market operators continue to expand their commercial ventures. Following the Ninth Circuit ruling, Kalshi has secured a notable partnership as the exclusive prediction-market partner for the US Open, following a series of partnerships with five MLB teams announced last week.
This development underscores the contrasting dynamics within the industry, where state regulators challenge sports event contracts in court, while leagues and teams increasingly view prediction market companies as legitimate commercial allies.
Expect to see more sports partnerships emerging, particularly in states where legal sports betting is not yet established or where litigation surrounding prediction markets is still active.