Ninth Circuit Backs Nevada in Sports Prediction Market Dispute

Ninth Circuit Rejects Federal Preemption Argument

The three-judge Ninth Circuit panel ruled 3-0 in favor of Nevada, providing a significant legal boost to the state’s efforts to regulate sports-event contracts offered by prediction markets.

The case involves platforms including Kalshi, Crypto.com and Robinhood, which have offered contracts linked to sports events. Nevada regulators have argued that these products fall within the state’s definition of wagering and therefore require licensing.

The ruling emphatically rejected the view that federal commodities legislation prevents Nevada from applying its gaming laws to these activities.

Nevada Says Sports Contracts Are Gambling

The Nevada Gaming Control Board (NGCB) maintains that sports-event contracts, as well as certain other event contracts, constitute wagering activity under NRS 463.0193 and NRS 463.01962.

Consequently, entities offering these contracts in Nevada must obtain the appropriate state gaming licenses.

Nevada Gaming Control Board Chairman Mike Dreitzer welcomed the ruling, saying:

“This completely vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state.”

Dreitzer emphasized the NGCB’s long-standing role in regulating Nevada’s gaming sector and said the Board would continue enforcing state law against unlicensed operations.

Nevada Intensifies Action Against Prediction Markets

The decision comes as Nevada has stepped up enforcement against prediction market operators offering sports-related contracts without state authorization.

According to the NGCB, the Board has taken action in recent months to halt the operations of other prediction markets and has successfully restricted unlicensed prediction markets previously operating in the state.

The regulator has also determined that Kalshi’s operations are unlawful in Nevada, alleging violations of NRS 463.160, NRS 463.350, NRS 465.086 and NRS 465.092.

The dispute highlights a growing regulatory issue for the U.S. gambling industry: whether sports-event contracts offered through prediction markets should be treated as financial products under federal commodities law or as wagering products subject to state gaming regulation.

State Licensing Remains Central to Nevada’s Position

Nevada's regulatory framework requires gambling activities to be licensed and controlled by the state. The NGCB argues that applying this framework to sports-event contracts is consistent with the state's public policy and longstanding approach to gaming oversight.

Nevada law identifies the gaming industry as critically important to the state's economy and the general welfare of its residents. The state's policy therefore calls for gaming activities to be licensed and regulated to protect public health, safety, morals, good order and general welfare.

Governor Lombardo Supports Gaming Board

Nevada Governor Joe Lombardo also welcomed the appellate court's decision and praised the Gaming Control Board for its enforcement efforts.

“Prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework.”

Lombardo said the Board's actions were important to maintaining Nevada's regulatory standards and protecting confidence in the state's gaming oversight.

“I commend Chairman Dreitzer and the Nevada Gaming Control Board for their diligent work to uphold Nevada’s longstanding regulatory standards, safeguard the integrity of our gaming industry, and ensure the public can continue to have confidence in its oversight,” the governor added.

Implications for the U.S. Prediction Markets Sector

The Ninth Circuit ruling represents an important development in the expanding U.S. debate over prediction markets and their intersection with regulated sports betting.

For Nevada, the decision reinforces the state's authority to apply its gaming laws to sports-event contracts and strengthens the position of state regulators seeking to prevent unlicensed operators from offering wagering products.

For prediction market companies, meanwhile, the ruling underscores the regulatory complexity of offering sports-related contracts in states with established gaming frameworks. The distinction between federally regulated financial contracts and state-regulated gambling products remains a key issue as prediction markets expand their presence in the U.S. market.