An appeals court rules states can regulate prediction markets, finding Kalshi's sports event contracts are bets, not swaps, and subject to state gambling laws (Lauren McCarthy/New York Times)

The 11th Circuit Court of Appeals held that Kalshi’s contracts tied to sports outcomes are legally classified as bets rather than swaps, making them subject to state gambling regulations. This decision overturns a prior appellate ruling and creates a split among federal courts, prompting the Supreme Court to consider resolving the conflict.