A federal appeals court ruled that states can enforce gambling laws on Kalshi’s sports markets, treating event contracts as wagers and allowing licensing rules.

A federal appeals court ruled Friday that state regulators may enforce laws on Kalshi’s sports prediction markets.

Legal background

The panel held that contracts tied to the outcome of sporting events fall under state gambling statutes, allowing states to apply licensing, consumer‑protection and tax rules.

The court based its decision on precedents that treat sports event contracts as wagers when they are purchased for profit rather than for hedging.

The ruling follows a similar decision issued less than a month earlier that affirmed state jurisdiction over another sports‑related betting platform.

Impact on Kalshi

Kalshi, a Chicago‑based exchange that offers binary contracts on events ranging from elections to sports scores, said it will assess the impact of the decision on its operations.

Kalshi’s chief legal officer said the company remains committed to complying with applicable regulations while defending its view that the contracts are not traditional bets.

The court’s orders do not halt Kalshi’s existing markets, but they require the firm to submit to state‑level regulatory review before launching new sports contracts.

Kalshi has until 30 days to file a response to the court’s order, after which the case may proceed to the Supreme Court if either party seeks further review.

Industry response

State regulators, such as the Illinois Gaming Board, have previously indicated that they view sports‑prediction contracts as gambling products subject to oversight.

Industry analysts note that the decisions could prompt other exchanges to seek state licenses or modify product offerings to avoid legal challenges.

Some market participants argue that the rulings could slow innovation in the emerging binary‑contract sector.

Future proceedings

The U.S. Department of Justice has not commented on the rulings.

If Kalshi or a state chooses to appeal, the next procedural step could bring the issue before the Supreme Court later this year.