Federal Court Rules Against Kalshi in Prediction Market Legal Battle

A federal appeals court has delivered a decisive legal setback to Kalshi, a prominent prediction market platform, ruling that Nevada may proceed with its efforts to regulate the company’s operations within the state.

In a unanimous 3-0 decision issued Friday, the Ninth Circuit Court of Appeals in San Francisco affirmed that federal commodity trading law does not preempt Nevada’s authority to regulate Kalshi’s sports betting activities. All three judges hearing the case were appointed to the federal bench by former President Donald Trump.

Writing for the panel, Circuit Judge Ryan Nelson stated that Kalshi’s business model—framed through its own marketing as “the first app for legal sports betting”—clearly falls within the definition of sports gambling, an area traditionally governed by state regulators rather than the federal Commodity Futures Trading Commission (CFTC). Nelson emphasized that Congress did not intend for the CFTC to assume a broad role as a national gambling regulator when it expanded the agency’s jurisdiction through the 2010 Dodd-Frank Act.

“The CFTC is not a national gambling regulator,” Judge Nelson wrote. “No one suggested it was until over a decade after the law was passed.”

The ruling aligns with a growing wave of state-led legal challenges aimed at clarifying regulatory oversight over prediction markets, which allow users to bet on a variety of future events, including elections and geopolitical developments. Currently, at least 20 states are engaged in litigation over whether such platforms should be treated as gambling operations under state law. In July, 44 states signed a joint letter describing prediction markets as “a new form of casino” that could pose risks to young people.

The Ninth Circuit’s decision follows a similar ruling in April from the Third Circuit Court of Appeals in Philadelphia, which sided against New Jersey’s attempt to regulate prediction markets. These conflicting interpretations increase the likelihood that the U.S. Supreme Court will ultimately determine which governmental bodies have jurisdiction over such platforms.

Meanwhile, the Trump administration has long argued that the CFTC should retain sole authority over prediction markets, a stance echoed by allies of the former president. Earlier this year, Donald Trump Jr. urged Republican state attorneys general to refrain from taking action against companies like Kalshi and Polymarket.

In a separate development, the Trump administration has proposed new policies that critics warn could undermine food safety standards. On Friday, former President Trump announced on Truth Social that he would direct the U.S. Department of Agriculture to allow farmers and ranchers to slaughter and process their own livestock, bypassing USDA-inspected facilities. The move comes after a recent appearance on the Glenn Beck Program, during which the conservative commentator criticized the meat-processing industry as a monopolistic “cartel.”

The announcement has drawn sharp criticism from agricultural groups. The National Cattlemen’s Beef Association issued a statement opposing the plan, warning that weakening federal meat inspection standards could erode consumer trust in U.S. beef. The statement emphasized that the nation’s food safety system, built over generations, should not be compromised for short-term political gain.

The four largest meat processors—Tyson Foods, Cargill Incorporated, JBS, and National Beef—currently control approximately 85 percent of the market. In May, the Department of Justice launched an antitrust probe into the industry, and in June, the USDA allocated $60 million to support small meat processors. Despite these efforts, beef prices remain elevated, and the U.S. cattle herd continues to shrink amid high demand.

The former president’s proposal has drawn further scrutiny amid ongoing controversy over a separate plan to allow tariff-free beef imports—a policy condemned by the American Farm Bureau and criticized for its lack of transparency regarding the countries of origin.