The Ninth Circuit Confirms What Should Have Been Self-Evident: A Wager Is A Wager
Madeline Pendley, an attorney with Rafferty Domnick Cunningham & Yaffa, examines the Ninth Circuit’s recent ruling on prediction markets and sports wagering, focusing on the legal and consumer-protection questions raised when gambling is presented as a financial contract.
Pendley explains that the Ninth Circuit treated sports wagers offered through prediction markets as gambling despite terminology such as “event contracts.” The ruling conflicts with an earlier Third Circuit decision concluding that Kalshi’s sports event contracts qualify as swaps under the Commodity Exchange Act and are therefore subject to federal pre-emption from state gambling regulation. With federal appellate courts reaching different conclusions and related litigation continuing elsewhere, Pendley notes that the dispute may eventually require Supreme Court review or congressional action.
Beyond the jurisdictional issue, Pendley emphasizes the consumer implications of how prediction markets are presented. She discusses state gambling regulations involving age restrictions, licensing, responsible-gaming safeguards, consumer protection, and regulatory oversight, arguing that these concerns remain relevant regardless of how a wagering product is labeled. She also addresses the longstanding role of states in regulating gambling within their borders as prediction markets expand into sports, elections, economic events, and entertainment.
Rafferty Domnick Cunningham & Yaffa continues its work addressing legal and consumer-protection issues involving emerging products and technologies.
