Ninth Circuit Court Rules Kalshi Sports Contracts Constitute Gambling

The U.S. Court of Appeals for the Ninth Circuit ruled 3-0 that Kalshi's sports-related event contracts are essentially sports betting, rejecting the company's attempt to classify them as swaps under federal regulation. The court emphasized that these contracts do not serve as hedging tools for financial risk and create artificial risks for consumers. This ruling poses a significant existential threat to Kalshi, as sports-related business accounts for 72% of its total volume, and it may now be subject to state-level licensing, taxes, and operational bans.