The 9th Circuit Court of Appeals ruled in favor of state regulators in a significant legal battle involving prediction market platform Kalshi. The decision potentially revives Arizona's ongoing prosecution of the company, which state officials have accused of operating an illegal gambling enterprise.

The court's ruling affirms a lower court injunction that blocked Kalshi from offering event-based contracts tied to matters such as election outcomes and natural disasters. States argue these contracts constitute gambling under federal and state law, while Kalshi maintains its platform operates within legal boundaries.

Arizona Attorney General Kris Mayes has been a leading voice among states pursuing enforcement action, asserting that Kalshi's operations exploit regulatory gaps. The company previously sued federal agencies seeking clarity, but the 9th Circuit's decision narrows its legal options.

Legal analysts say the ruling could set precedent for how courts treat emerging financial prediction markets. Kalshi has indicated it may appeal further, though its path forward appears increasingly limited.