Bits + Bips: Is Kalshi Headed to the Supreme Court Next?

The Ninth Circuit’s recent 3-0 ruling against Kalshi’s sports event contracts creates a significant legal conflict with the Third Circuit, setting the stage for a potential Supreme Court intervention. This "circuit split" challenges the CFTC’s authority over prediction markets, which the Ninth Circuit labeled as gambling rather than regulated commodity derivatives. Andy Ross, representing Kalshi, defends the platform’s role in providing fair price discovery and hedging opportunities for businesses, distinguishing these markets from traditional sports books that ban successful traders. While the CFTC maintains that its jurisdiction covers these swap-like contracts, the industry faces ongoing regulatory uncertainty across multiple states. Despite these legal hurdles, Kalshi continues to expand its market offerings, demonstrating that well-calibrated prediction markets can function effectively even with smaller trading volumes, providing essential risk management tools for diverse participants ranging from individual users to small enterprises.