Kalshi hearings this week could redefine prediction markets in the US
This week could be one of the most important in the dispute between prediction markets and sports betting regulation in the United States. On 10 July, two cases involving Kalshi will be heard by different courts, both addressing the same central question: are contracts based on sports outcomes financial derivatives regulated by the federal government, or are they sports betting products subject to state laws and tribal rights?
The hearings will take place before the King County Superior Court in Washington State and the US Court of Appeals for the Ninth Circuit, which will consider an appeal filed by three California tribes. Although the cases are separate, the rulings could directly influence the expansion of Kalshi and other prediction market platforms across the country.
Washington seeks to halt Kalshi’s operations
In Washington State, the government is seeking a preliminary injunction to prevent Kalshi from continuing to offer sports event contracts to local residents. According to state authorities, these products, in practice, function as sports betting and should therefore be subject to the state’s gambling laws. The injunction would not represent a final ruling on the merits of the case. Its purpose is to temporarily suspend the company’s operations while the litigation continues.
Before the case reached the state court, Kalshi attempted to move it to federal court, arguing that its contracts are regulated by the Commodity Futures Trading Commission (CFTC), the federal agency responsible for overseeing derivatives markets. The attempt was unsuccessful, and the case was returned to the King County Superior Court. Meanwhile, the company’s appeal before the Ninth Circuit regarding the jurisdictional dispute remains pending.
The state argues that the terminology used by the company does not change the nature of the activity. According to Washington, regardless of whether they are called “event contracts” or “prediction markets,” the products allow consumers to risk money on the outcome of sporting events, making them sports betting products that require state authorisation.
Kalshi, however, continues to rely on its long-standing position that its products are financial contracts traded on an exchange registered with and supervised by the CFTC. According to the company, the Commodity Exchange Act (CEA) grants exclusive jurisdiction to the federal regulator, preventing states from imposing additional restrictions on products approved by the agency.
California dispute involves tribal rights
While Washington is debating the state’s authority to regulate sports event contracts, another case could have even broader consequences for the industry. The US Court of Appeals for the Ninth Circuit will hear arguments in an appeal filed by the Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians. The tribes argue that Kalshi’s sports event contracts violate both California law and the rights guaranteed under the Indian Gaming Regulatory Act (IGRA).
According to the tribes, allowing federally regulated platforms to offer internet-based contracts on sports outcomes creates a parallel form of sports betting that undermines the gaming framework established under federal law for tribal lands. The case represents one of the first attempts to apply the IGRA to prediction markets regulated by the CFTC.
Initial ruling favoured Kalshi
The case began in 2025, when the tribes sought a preliminary injunction to stop the company’s operations. In November 2025, Judge Jacqueline Scott Corley of the US District Court for the Northern District of California denied the request. In her ruling, the judge concluded that the tribes had not demonstrated a sufficient likelihood of success to justify emergency relief and emphasised that the Commodity Exchange Act grants the CFTC exclusive authority to supervise markets such as the one operated by Kalshi. The ruling did not end the case but formed the basis of the appeal now before the Ninth Circuit.
Later, in May 2026, the same court decided to temporarily stay the main proceedings until the Ninth Circuit rules on both the tribes’ appeal and another case involving Kalshi and state authorities. According to the decision, waiting for the appellate rulings could help avoid conflicting interpretations of similar legal issues.
If the courts confirm that the Commodity Exchange Act grants exclusive jurisdiction to the CFTC, states may face greater difficulty restricting platforms offering similar contracts. On the other hand, a victory for the states or the tribes could strengthen the argument that sports event contracts should be treated as traditional sports betting products, subject to state regulations and, in some cases, the exclusive rights granted to tribal gaming operations under the IGRA.
The dispute is also attracting attention because several other states have already initiated or are considering similar actions against the company, making the litigation one of the most significant legal tests concerning the regulation of prediction markets in the United States.
What the market will be watching for
In the Washington case, the primary question is whether the court will grant the preliminary injunction requested by the state, temporarily suspending Kalshi’s offering of sports event contracts.
Before the Ninth Circuit, attention will focus on the questions raised by the appellate judges, which may indicate how the court interprets the relationship between the Commodity Exchange Act, the Indian Gaming Regulatory Act, and state sports betting laws. Although a ruling may not be issued immediately after the hearing, the panel’s comments could provide important indications of the case’s direction and its potential impact on the US prediction markets industry.
This article was first published on the Portuguese SiGMA News page on 6 July 2026.
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