US Court Fight Echoes UK’s Tough Line on Prediction Apps

A US federal appeals court has ruled that sports contracts sold by the prediction platform Kalshi are, in substance, sports bets rather than financial products – a decision that pushes the sector towards the Supreme Court and lines up with a position the UK Gambling Commission (UKGC) has held since February 2026. New Jersey has now formally asked America’s highest court to settle the question, after two circuit courts reached opposite conclusions within months of each other.

What’s actually changed

On 28 August, the Ninth US Circuit Court of Appeals sided with Nevada’s gaming regulator,
ruling that Nevada may subject Kalshi’s sports-event contracts to its gambling laws
, rejecting the company’s argument that the contracts are federally regulated derivatives beyond state reach. The ruling directly clashed with an earlier decision:
it conflicts directly with an April decision by the Third Circuit, which held that New Jersey could not regulate Kalshi’s sports contracts, creating a circuit split that increases the chances of Supreme Court review
. Kalshi has said it disagrees and will keep fighting the finding.

New Jersey has since acted on that split.
The state has officially petitioned the Supreme Court to rule on whether sports prediction markets are exempt from state gambling laws, appealing the Third Circuit’s ruling in Kalshi’s favour
. Kalshi’s response was blunt: a spokesperson said the firm
is “an open, nationwide financial exchange” that “cannot be regulated by 50 different regulators”
. Whether the justices agree to hear the case remains open, since
the Supreme Court only accepts around 100 cases a year, fewer than 5% of petitions filed
.

While US courts argue over labels, the UKGC settled the question for Great Britain months ago.
The regulator set out its position on prediction markets in a February 2026 blog post, stating that any commercial product meeting the legal definition of gambling in the UK must be regulated and licensed by the Commission
. It went further,
warning platforms not to target UK customers or accept business from them, since operating without the correct licence is a criminal offence
. Practically, that means Kalshi-style platforms would likely need
a betting intermediary licence, with the Commission viewing them as similar to betting exchanges
.

What it means for you

For UK players, the position is already reflected in how these platforms behave here.
Kalshi excluded the UK from its 140-country international expansion in October 2025
, and Polymarket blocks UK visitors outright. If you were tempted to route around that block, it’s worth knowing what you’d be giving up: none of the safeguards that come with a UKGC-licensed operator would apply. There’s no GamStop self-exclusion, no access to the Gambling Ombudsman or other ADR schemes if a dispute arises, and no oversight of deposit limits or affordability checks. There’s also a separate financial-services angle to be aware of:
the sale of binary options to UK retail consumers has been permanently banned since 2019 because of their highly speculative nature and the risk of consumer harm
, which is part of why some event-contract products sit in an even murkier position for British users than ordinary betting does.

The bigger picture

The US courts are now wrestling, case by case, with a question British regulators tried to close off early: does dressing a bet up as a “trade” change what it actually is? The scale of the argument is considerable – New Jersey’s petition warns of an “explosion of litigation” and calls the underlying issue one of “tremendous practical and legal consequence” for state gambling law. The UKGC’s approach – insisting that existing licensing law already covers these products, rather than waiting for a purpose-built regime – fits the same technology-neutral principle behind the wider reform programme now reshaping British gambling, from the statutory levy to affordability checks and the deposit-limit overhaul. The message for any new product hoping to test that boundary is consistent: in Great Britain, if it looks and behaves like a bet, the Commission will treat it as one.

Sources

• PYMNTS – Ninth Circuit Hands States Victory in Prediction Market Jurisdiction Fight
• CNN Business – States can regulate prediction markets as gambling, federal appeals court rules
• Reason – Kalshi says it’s a prediction market. The 9th Circuit says it’s gambling.
• TechSpot – Federal appeals court rules Kalshi’s sports prediction markets are gambling
• CasinoBeats – New Jersey Petitions Supreme Court to Hear Sports Prediction Market Case Following Circuit Split
• CNBC – New Jersey asks the Supreme Court to take on prediction markets
• Proactive Investors – Why prediction markets are facing a UK regulatory crackdown
• Inside Predictions – Prediction Markets in the UK: Legal Status, Platforms, What’s Next
• Honest Betting Reviews – Is Kalshi Legal in the UK?
• Gambling News – Kalshi CEO Comments on Recent Ninth Circuit Ruling