Kalshi and Polymarket failed to stop the Nevada and Washington state gambling lawsuit, and the case continues.

Odaily Planet Daily reports that the U.S. Ninth Circuit Court of Appeals rejected Kalshi and Polymarket's request to allow Nevada and Washington states to proceed with their gambling-related cases against the two prediction market platforms, remanding the cases to state courts. The court held that the two companies failed to demonstrate that the cases should fall under federal jurisdiction. The platforms' claim of priority under the Commodity Exchange Act alone is insufficient to automatically establish federal jurisdiction. Kalshi and Polymarket had previously argued that contracts for sports, political, and other events are federally regulated derivatives under the CFTC, and that state governments have no jurisdiction under gambling laws. However, Nevada and Washington argued that such contracts constitute unlicensed gambling products. This ruling shows that the disagreement among U.S. courts regarding whether prediction markets fall under federally regulated swaps or illegal gambling products under state law is widening.