States can regulate prediction markets as gambling, federal appeals court rules

But a staggering 44 states have argued that these platforms are, in fact, gambling and should be subjected to state gaming laws and taxes.

“The substance of the sports event contracts offered on Kalshi’s (exchange) is sports gambling, regardless of whether Kalshi calls them swaps,” the appeals panel wrote Friday, adding that “Kalshi’s attempts to distinguish its sports event contracts from sportsbooks betting are unpersuasive.”

The judges also said it was “disingenuous” for Kalshi to argue in court that its products weren’t sports-betting when it previously used that phrasing in marketing materials.