US Court Rules Against Prediction Markets, Setting Up Possible Supreme Court Fight

A federal appeals court in the 9th Circuit ruled that sports-related prediction market contracts traded on online platforms do not qualify as swaps, directly conflicting with an April decision from the 3rd Circuit. This so-called circuit split is a classic trigger for Supreme Court review. The prediction markets industry, which includes platforms like Kalshi and Polymarket, has grown rapidly in recent years and drawn increasing regulatory scrutiny. The eventual ruling will determine the legal status of sports event contracts and which body regulates them — the CFTC or state gaming commissions. For investors in fintech and alternative exchanges, this is an important signal about regulatory risk in the sector.