Federal Judge Rules Against Kalshi, Sparking Prediction Market Jurisdiction DebateA federal judge recently ruled against prediction market company Kalshi, stating that certain sports-related contracts offered by the company fall under Nevada state jurisdiction, not federal. This decision could significantly impact how prediction markets operate, potentially requiring them to comply with individual state laws rather than a single federal framework. Kalshi had argued that its event contracts are a type of swap, which are typically regulated by the federal Commodity Futures Trading Commission, or CFTC. However, the judge distinguished between commodities trading and gaming, asserting that sports outcome contracts are not swaps and therefore not exclusively under the CFTCs authority. Kalshi plans to appeal this decision, citing conflicting rulings from other federal courts on prediction market jurisdiction. This ongoing legal battle highlights a broader question about whether prediction markets are financial products or a form of gambling. The outcome will likely shape the future of prediction markets, determining whether they face a patchwork of state regulations or a unified federal approach.

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