The Ninth Circuit Court of Appeals ruled that Kalshi’s sports event contracts are not swaps under the Commodity Exchange Act. This decision means Nevada’s gaming laws apply to the prediction market platform rather than federal CFTC regulation. The court distinguished between the occurrence of an event and its outcome, finding that Kalshi’s contracts relate to outcomes, not occurrences. The ruling also relied on CFTC regulation 17 C.F.R. § 40.11(a), which bars event contracts involving or referencing gaming. This decision directly conflicts with the Third Circuit’s April ruling in New Jersey, where the same contracts were classified as swaps, setting the stage for potential Supreme Court review.
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