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Kalshi Wins Federal Court Ruling in Sports Betting Fight
A United States federal appeals court ruled in Kalshi's favour last week, finding that New Jersey cannot apply its state gambling statutes to the crypto prediction market operator. The Third Circuit decision creates a direct contradiction with a separate federal court that heard opposing arguments about the same legal question this week — a split that legal analysts say is likely to compel the US Supreme Court to determine whether crypto prediction platforms constitute regulated financial derivatives or unlicensed betting services, possibly by 2027.
What This Means for Crypto Casino Players
For UK players, the immediate practical effect is limited: this legal battle is unfolding entirely within US jurisdiction and British-based bettors are not subject to US state gambling law. The outcome will nonetheless set a precedent that European and UK regulators are watching closely. Platforms including Polymarket already accept UK users, and a Supreme Court ruling classifying prediction contracts as financial instruments rather than gambling could accelerate similar arguments before UK authorities. All crypto sports betting platforms available to UK players hold international licences — typically Curaçao — and are not regulated by the UK Gambling Commission. Players can review currently available operators on our best crypto sports betting sites for UK players.
The commercial scale of the US dispute gives a sense of what is at stake globally. Kalshi collected £19 million in fees during a single four-day March Madness wagering window, and analysts forecast the platform will handle £154 billion in total wagers across 2026. Sports contracts make up more than 85% of all bets placed on the platform, which explains why Kalshi has been willing to fight at every level of the federal court system rather than withdraw from contested states.
The Federal vs. State Legal Divide
The dispute turns on whether prediction market wagers — where users stake crypto on the outcomes of sporting fixtures, economic releases, and other verifiable events — are financial products regulated by the US Commodity Futures Trading Commission, or betting services subject to individual states' gambling statutes. The CFTC has openly backed Kalshi's classification as a financial exchange, creating the unusual situation of a federal regulator supporting a company being prosecuted by multiple state governments simultaneously.
The Third Circuit court found that federal law pre-empts New Jersey's attempt to enforce its betting rules against Kalshi. The Ninth Circuit — covering Arizona, which has filed criminal charges against the platform — heard arguments this week and is broadly expected to reach the opposite conclusion. Nevada, Washington State, Connecticut, and Illinois have also taken action against Kalshi. A dissenting Third Circuit judge noted that “if it looks like gambling, talks like gambling, and calls itself gambling, it's gambling.”
A split between two federal circuit courts would ordinarily proceed directly to Supreme Court review. Kalshi currently holds a valuation of approximately £17 billion; its closest rival, Polymarket, is valued at around £15 billion. Both companies built their business models on the assumption that prediction contracts are regulated financial instruments, and the Supreme Court case — if it proceeds — will determine whether that premise holds.
What to Watch
The Ninth Circuit ruling is expected in the coming weeks and will be the clearest signal of whether a Supreme Court case is imminent. A parallel legislative track is also under way: US Congress members introduced a bipartisan bill in March to reclassify crypto prediction bets as gambling, regardless of how the courts decide. UK players should note that any resulting restrictions would apply only to US-domiciled platforms — internationally-licensed operators available to British bettors would not be directly affected by US court or legislative outcomes.