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Kalshi and Polymarket are facing a widening legal battle over whether their event contracts are federally regulated financial products or illegal gambling under state law, and California is now part of that fight through tribal litigation at the Ninth Circuit.
According to the source report, at least 12 states are in active conflict with the two platforms. The disputes span injunctions, criminal charges, federal preemption claims, and appeals, creating what the article describes as a patchwork in which the products may be allowed in some places and challenged in others.
Kalshi is a CFTC-designated contract market, while Polymarket re-entered the U.S. market through the acquisition of a CFTC-licensed exchange and clearinghouse. Both offer contracts tied to real-world outcomes, including elections, weather, and sports.
For California readers, the most relevant piece is a case brought by three California tribes in the Ninth Circuit. The tribes argue the contracts violate the Indian Gaming Regulatory Act, adding a tribal-gaming dimension to a dispute that is already testing the boundary between federal commodities oversight and state gambling enforcement.
Elsewhere, the legal results have split. The source says Massachusetts and Nevada have injunctions against the platforms, while federal courts blocked state enforcement in Tennessee, Arizona, Ohio, and Connecticut. A federal judge in New York sided with state regulators, and Kalshi is appealing that ruling. Arizona has also filed criminal charges against Kalshi, including under its election-betting prohibition.
The CFTC is also directly involved. The agency sued Connecticut, Arizona, and Illinois to defend the platforms’ right to operate under what the companies argue is exclusive federal jurisdiction. Kalshi has argued in court filings that its contracts are “exchange-traded assets whose value is set by market forces,” while state officials have framed the products as an attempt to sidestep gambling law.
The stakes are significant because sports contracts now make up roughly 90% of Kalshi’s trading volume and about half of Polymarket’s, according to the report. Kalshi also said it processed more than $1 billion on the Super Bowl alone.
For players in California, the immediate takeaway is uncertainty. The source does not indicate any final statewide resolution yet, and the Ninth Circuit tribal case is still part of a broader legal fight that could shape how prediction markets, sports event contracts, and gambling regulation are treated going forward.
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Source: As reported by cryptonews.net.
