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- The Ninth Circuit of Appeals ruled that states can regulate prediction markets as gambling, giving state regulators leverage over federally licensed platforms.
- Major casinos and sportsbooks argue that rapidly expanding sports prediction trading is severely undercutting their traditional gambling revenues.
A federal appeals court ruling in Nevada has intensified the U.S. gambling industry’s fight against prediction markets, giving casinos, sportsbooks, and state regulators new support for treating the platforms as gambling rather than purely financial trading.
CNN reported that the conflict has widened into what Indian Gaming Association chair James Siva called an “all-out war,” with operators including Kalshi and Polymarket facing pressure from casinos, tribal groups, consumer advocates, and attorneys general across the country.
The stakes are high because prediction market companies are licensed by the Commodity Futures Trading Commission and do not pay the kind of state gambling taxes that casinos and sportsbooks do. The article says 44 of 50 state attorneys general, dozens of tribes, and bipartisan lawmakers are pushing for tighter limits on the industry, while Congress has seen five new bipartisan bills this summer on top of more than a dozen pending proposals.
Ninth Circuit ruling gives states fresh leverage
On Friday, the Ninth Circuit Court of Appeals unanimously ruled that states can regulate prediction platforms as gambling. In the court’s words, “Placing sports bets, even when called by another name, is still gambling.” The panel also said, “The CFTC is not a national gambling regulator.”
That ruling cuts at the core argument used by prediction market companies, which have said federal commodities oversight should shield them from state gambling rules. Nevada regulators and the Nevada Resorts Association have become central players in that legal fight, and the case could shape how other states respond.
The dispute has also turned into a major lobbying battle. According to federal records cited by CNN, the American Gaming Association and major casinos have spent at least $3.3 million on federal lobbying this year. Prediction companies have spent at least $5.6 million lobbying Congress.
Sportsbooks are responding as prediction volume surges
The article says prediction markets have grown into a multibillion-dollar business spanning sports, politics, culture and weather, with sports now accounting for a large share of activity. Kalshi’s sports and parlay contracts made up 78% of its monthly volume, or roughly $26 billion, while 99% of Polymarket’s U.S. platform volume came from sports and parlays, topping $3 billion.
Casino and sportsbook executives argue that growth is already hurting their business. Circa Sports owner Derek Stevens said the company’s sports handle is down 35% this year, which he attributes to prediction markets. Mike Dreitzer described the threat as “existential.”
The response is not limited to opposition. FanDuel and DraftKings have also launched CFTC-regulated prediction apps in states where they do not hold sportsbook licenses, showing how major betting operators are adapting while the legal fight plays out.
What comes next
The next questions are whether more states pursue litigation or new laws, whether Congress advances any of the pending bills, and whether the broader fight eventually reaches the Supreme Court.
For now, the Nevada appellate ruling gives state regulators and casino groups a stronger position in a dispute that is increasingly defining the boundary between sports betting and federally regulated prediction trading.
Source: As reported by Marshall Cohen.
