9th Circuit ruling hands Arizona a win on sports betting
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A federal appeals ruling on state regulation of online sports betting is a win for Arizona but doesn't resolve the state's ongoing issues with prediction markets like Kalshi and Polymarket.
Why it matters: Arizona Attorney General Kris Mayes is attempting to assert state authority over online prediction markets but has faced pushback from the federal government and the courts.
Driving the news: The U.S. Ninth Circuit Court of Appeals ruled in a case out of Nevada on Friday that the federal Commodity Exchange Act doesn't bar states from regulating Kalshi's online sports betting.
- Kalshi argued that wagers placed on sporting events were swaps — a type of derivative regulated by the federal Commodity Futures Trading Commission (CFTC).
- The appellate court disagreed and upheld a lower court's decision to allow Nevada to enforce state sports betting laws on Kalshi.
What they're saying: Mayes touted the ruling as a victory for states' authority to regulate gambling.
- "Kalshi's position would have effectively federalized sports betting regulation nationwide and swept aside decades of state and tribal oversight built to protect consumers from the real harms of unregulated gambling," she said in a press statement.
Yes, but: The ruling doesn't help Mayes in her battle to regulate prediction market wagering on elections.
- The Ninth Circuit remanded a question on Nevada's authority over Kalshi's election wagering back to the district court.
Catch up quick: Mayes brought criminal charges against Kalshi in March, accusing it of running an illegal gambling operation and of violating state laws against election wagering.
- A federal judge blocked that prosecution, ruling that online prediction markets are regulated solely by the CFTC.
What's next: Mayes' office is reviewing the Friday ruling and hasn't yet made any decisions regarding enforcement, spokesperson Richie Taylor tells Axios.
The bottom line: For now, nothing changes in Arizona when it comes to betting through online prediction markets, but the Ninth Circuit's ruling and the portion of the Nevada case that goes back to the district court could have huge implications for gambling regulation here.