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Courts Split on Prediction Markets as CFTC Asserts Power; Nevada Presses Case and Tennessee Shields Kalshi

A fast‑moving fight over federal versus state control has produced contradictory rulings, leaving the fate of sports‑focused event contracts likely for higher courts.

Overview

  • After the Ninth Circuit rejected Kalshi’s bid to halt Nevada’s enforcement, the state filed a civil suit to block the platform’s sports contracts, which Kalshi then removed to federal court.
  • A federal judge in Tennessee granted Kalshi a preliminary injunction, blocking state gambling enforcement and signaling that its sports event contracts may fall under federal derivatives law.
  • The CFTC under Chair Michael Selig filed amicus briefs and declared exclusive federal jurisdiction over prediction markets, drawing opposition from state regulators and figures such as Utah Gov. Spencer Cox and Chris Christie.
  • A Federal Reserve study found Kalshi’s markets provide high‑frequency forecasts comparable to or sometimes better than traditional benchmarks, bolstering claims of policy value.
  • Platforms remain commercially active with heavy sports volume—Kalshi reported over $800 million traded on Super Bowl Sunday—while legal experts expect the jurisdictional dispute to advance to higher appellate courts.