In a landmark decision, a federal appeals court, specifically the Ninth Circuit, has ruled that states have the authority to regulate prediction markets as gambling. This ruling has significant implications for platforms like Kalshi, whose operations have come under scrutiny. The court emphasized that contracts for sports wagers should not be classified as swaps but rather as gambling activities, allowing states to enforce their gambling regulations. This judgment not only revives enforcement actions in Arizona but also arms Nevada with the legal backing to oversee prediction markets. The ruling is expected to provoke further legal battles, potentially escalating to the Supreme Court. As a result, companies in the prediction market sector, including Kalshi, face increased regulatory scrutiny, while competitors like DraftKings and Flutter Entertainment have seen positive market reactions following this development.