As prediction markets have grown from novelty to fixture in American life, the law has struggled to keep pace with what they are and who should govern them. A federal appeals court in Cincinnati ruled unanimously this week that Ohio and Tennessee may regulate companies like Kalshi under existing gambling statutes — a decision that joins two other federal courts in reaching opposite conclusions on the same question. The resulting patchwork of authority, touching on everything from election bets to nuclear deal wagers, now points toward the Supreme Court as the only institution capable of drawin
US appeals court affirms state authority to regulate prediction markets
Experts have raised concerns about prediction markets' impact on young people and vulnerability to problem gaming.
States retain power to regulate prediction markets under gambling law
Mark
So the 6th Circuit just said states can regulate prediction markets. But I thought there were other courts that said the opposite?
Mimi
Exactly. The 9th Circuit said Kalshi contracts are subject to Nevada's gambling laws. The 3rd Circuit said they're not subject to New Jersey's. Now the 6th says Ohio and Tennessee can regulate them. Three different answers to the same question.
Luke
But hold on—are we sure those courts were actually answering the same question? The 3rd Circuit's reasoning might have been narrower than the 9th's. We should be careful not to overstate the conflict.
Mimi
Fair point. But the practical effect is still a mess. Kalshi faces different legal requirements depending on which state you're in.
Mark
Why does this matter beyond the companies involved? What's the real issue?
Mimi
Young people. Experts are worried about problem gambling, especially among minors. New York just sued Polymarket, saying it's an unlicensed gambling operation that puts underage users at risk.
Luke
That's the human concern, yes. But we don't have numbers on how many young people are actually using these platforms or what the harm looks like yet. The worry is real, but the evidence is still being gathered.
Mark
So what happens next?
Mimi
The Supreme Court could step in and create a uniform rule. Right now, companies don't know which laws apply where.
Luke
Could. But the Court hasn't taken a case yet. This could sit in limbo for years while the circuits disagree.
O Pulso
- Three federal appeals courts have now weighed in on prediction market regulation, and they cannot agree — the 9th and 6th Circuits say states may regulate, while the 3rd Circuit says they may not, leaving companies and users in legal limbo.
- The same week as the Cincinnati ruling, New York Governor Kathy Hochul sued Polymarket for operating an unlicensed gambling business, warning that young and vulnerable users are being put at risk.
- Kalshi, which allows bets on elections, geopolitical events, and cultural outcomes, finds itself at the center of a compliance crisis — potentially subject to a different legal regime in every state it operates.
- Public health experts have raised mounting alarms about prediction markets' reach among young people, adding a human urgency to what might otherwise appear a dry jurisdictional dispute.
- The circuit split now creates the precise legal conditions under which the Supreme Court typically intervenes, making a landmark ruling on the future of prediction markets increasingly likely.
As prediction markets have grown from novelty to fixture in American life, the law has struggled to keep pace with what they are and who should govern them. A federal appeals court in Cincinnati ruled unanimously this week that Ohio and Tennessee may regulate companies like Kalshi under existing gambling statutes — a decision that joins two other federal courts in reaching opposite conclusions on the same question. The resulting patchwork of authority, touching on everything from election bets to nuclear deal wagers, now points toward the Supreme Court as the only institution capable of drawing a definitive line.
On Friday, the 6th Circuit Court of Appeals in Cincinnati ruled unanimously that Ohio and Tennessee can regulate prediction market contracts under their gambling laws — a decision that places the court alongside the 9th Circuit and against the 3rd Circuit, which reached the opposite conclusion just months earlier in April. The company at the center of the conflict, Kalshi, offers bets on outcomes ranging from presidential elections to whether the US and Iran will reach a nuclear agreement. Its argument that such contracts should be exempt from state gambling oversight has now failed in two of the three circuits that have considered it.
Judge Julia Smith Gibbons, writing for the panel, found the reasoning straightforward: event contracts of this kind fall within the scope of state gambling authority. But the implications are anything but simple. Companies like Kalshi now face a fragmented compliance landscape, with their legal status shifting depending on which state — and which circuit — they operate in.
The ruling arrived in a week already charged with regulatory tension. New York Governor Kathy Hochul filed suit against Polymarket, a rival prediction platform, accusing it of running an unlicensed gambling operation and placing New Yorkers — especially minors — at risk. Polymarket pledged to fight back, signaling that the broader legal contest is only intensifying.
Experts have long raised concerns about prediction markets' appeal to young people and their potential to fuel problem gambling. Those concerns now carry legal weight, as states assert their authority to protect residents from platforms that blur the line between financial speculation and wagering. With three circuits in conflict and no Supreme Court case yet on the docket, the question of who governs these markets — and who bears responsibility for their consequences — remains unresolved, awaiting the intervention that only the nation's highest court can provide.
On Friday, a federal appeals court in Cincinnati handed down a decision that could reshape how prediction markets operate across the United States. The 6th Circuit Court of Appeals ruled unanimously that states retain the power to regulate prediction markets under their existing gambling laws, rejecting an argument by Kalshi, a company that offers bets on everything from election outcomes to geopolitical events, that such contracts should be exempt from state oversight.
The ruling matters because it exposes a fundamental tension in American law: as prediction markets have exploded in popularity, different federal courts have reached opposite conclusions about who gets to regulate them. Kalshi has become the focal point of this conflict. The 9th Circuit, based in San Francisco, decided last month that Kalshi's event contracts fall under Nevada's gambling regulations. But just months earlier, in April, the 3rd Circuit in Philadelphia ruled the opposite—that the same contracts are not subject to New Jersey's gambling laws. Now the 6th Circuit has sided with the 9th, creating a patchwork of authority that invites the Supreme Court to step in and settle the question once and for all.
Judge Julia Smith Gibbons, writing for the three-judge panel, concluded that Ohio and Tennessee can regulate event contracts as gambling under their state laws. The decision is straightforward in its reasoning but significant in its implications: if states can regulate these markets, then companies like Kalshi face a fragmented landscape of compliance obligations, and the explosive growth of prediction betting may face real friction.
Prediction markets have become a fixture of American wagering. Users bet on sporting events, presidential elections, cultural developments, and even international negotiations—such as whether the United States and Iran will reach a nuclear agreement. The markets appeal to people who want to express views about future events through financial stakes. But that appeal has also triggered alarm among regulators and public health experts. Concerns have mounted, particularly about young people's exposure to these platforms and the risk of problem gambling among vulnerable populations.
The timing of the ruling underscores the urgency. On Thursday, the same week the 6th Circuit issued its decision, New York's governor Kathy Hochul filed a lawsuit against Polymarket, another major prediction market platform, alleging it operates as an unlicensed gambling business. Hochul's statement was pointed: "By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming." Polymarket responded by pledging to "fight for its users," signaling that the legal battle is far from over.
What emerges from these parallel developments is a regulatory crisis waiting to be resolved. Three federal appeals courts have now weighed in, and they cannot agree. The Supreme Court's docket does not yet include a prediction market case, but the conflicting rulings create exactly the kind of circuit split that typically prompts the nation's highest court to grant review. If the justices do take up the question, they will have to decide whether prediction markets are fundamentally gambling operations subject to state law, or whether they occupy some other legal category that federal regulators should oversee. Until that happens, companies and states will operate in legal limbo, and the question of who bears responsibility for protecting young people from these platforms remains unsettled.
Citações Notáveis
By running an unlicensed gambling operation, Polymarket has done more than just knowingly violate state law, they have put New Yorkers at risk, especially those underage who are most vulnerable to problem gaming.— Governor Kathy Hochul
Polymarket stated it would fight for its users in response to New York's lawsuit.— Polymarket
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Leia o original em Al Jazeera ↗