6 ms·

9th Circuit sides with states in Kalshi gambling fight

170 points by hungryhobbit 29d ago

hungryhobbit 29d ago
The appeals court found sports betting isn’t shielded by the federal law used to block Kris Mayes’ prosecution.
- dcrazy 28d ago
  Hope dang comes in with a headline rewrite
  - Detrytus 28d ago
    and why would he do that? It is an actual title of the linked article.
gregjw 28d ago
how does anyone regard these things as innovation
- jeltz 27d ago
  Yeah, the idea is over 25 years old here in Europe and is called "betting exchange". Their only innovation is getting it regulated as commodity trading rather than online gambling.
mullingitover 28d ago
> “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments when it amended the (Commodity Exchange Act),” Judge Ryan Nelson wrote in the unanimous decision. Incredible that it's taken this long to arrive at the obvious.
- EA-3167 28d ago
  The law is slow by design, it's deliberative, it's multi-staged, it's escalatory and obsessed with consulting multiple jurists. That can be extremely frustrating until you start looking into how the country would look if individual judges were able to fast-track the whole system. Naturally we'd celebrate the positive outcomes, but the bad ruling would immediately go into effect rather than facing injunction, review, etc. These laws have profound effects and it takes people time to learn about what they pertain to, especially new technology or new ways of using it. It's good to have periods of feedback between the public, the courts, the legislature and the executive branch. The same things that slow down what we most want to happen quickly also slow down the things we desperately want to avoid. "If only the law moved as quickly as an individual" is great until you get a guy like Trump in power.
  - pennomi 28d ago
    The law being slow is exactly why a guy like Trump in power is dealing so much damage. Nearly everything he’s done has been illegal, but the decisions often take so long that they have no effect.
  - meowkit 28d ago
    Was great when the world ran on horses and whale blubber. The legal system tells itself this noble story of measured action without realizing it actually became the bad guy many decades ago. My brief little opinion here is half informed from dating a lawyer for a few years.
- echelon 28d ago
  Gambling is a negative externality that needs to be taxed. Gambling takes advantage of the poor, under-educated, and addictive personalities and puts them into financial distress. This places burden on families, the state, and local municipalities. It creates strain on the workforce and deflects legitimate economic activity that would otherwise strengthen the economy. We're a free society. I'm fine with gambling from a personal liberty perspective, but the companies that facilitate and profit need to pay 40-50% of their gross revenue to the government. That's comparable to tobacco. Companies also need to be restricted in how they are able to advertise their vices. Never to children, and never targeted to at-risk personality types. They also need to be tightly regulated and kept from using dark patterns and addictive gotcha mechanics to cause even greater harm to those most at risk.
lokar 28d ago
I wonder what this means for cases under loss recovery acts in states that have them.
delichon 28d ago
> As an example, the court explained that whether the Super Bowl happens is an “occurrence,” but who wins it is not. This level of parsing looks like judicial legislation to me. Isn't it one occurrence if the Rams win and another if the Packers win? Better that they declare the law void for vagueness and give the legislature another shot at it. Guessing what the words mean, when it is not at all clear to professionals let alone to the average citizen does not give proper notification of what the law is to the people subject to it.
- mandevil 28d ago
  Everyone agreed that this (what the court ruled) was the plain meaning of the law up until Kalshi just decided to go for it. They basically did an Uber on the law, completely ignoring how it had long been interpreted and demanding someone stop them. And only once Kalshi wanted to make money on sports gambling did there start to be parsing like this, to try to argue that sports gambling was legal on a CFTC-regulated exchange. If Kalshi had gotten the law thrown out for vagueness then basically there was a road map for making any law that got in the way of a company making money thrown out for vagueness. The key is that up until a few years ago basically the universal consensus was that sports gambling was not possible on a CFTC regulated exchange, then all of a sudden Kalshi did it and now they are trying to pay enough lawyers to get them to justify it. This ruling is not judicial legislation, this is demanding that companies actually follow the law.
  - delichon 28d ago
    Declaring the law void for vagueness would not favor Kalshi. It would undercut the federal preemption that Kalshi is advocating for.
    - jmalicki 28d ago
      Since when has vagueness been considered a bad thing for statutes? It's the foundation of the US (and anglo) legal system and why courts exist, to fill in. And vague statutes that can be interpreted by courts has long been preferred to precise legislated meaning that you seem to prefer. You could live in Germany or France if you prefer a legal system more ruled by clear statute?
morkalork 28d ago
Rem when mafia bookies running sports betting was a subplot on The Soprano's? It wasn't that long ago.
- SoftTalker 28d ago
  Well they are still doing it.
  - adzm 28d ago
    People seem to be blissfully unaware that illegal and underground gambling is still going very strong.
    - vkou 28d ago
      It's easier to be blissfully unaware when the illegal books don't bombard every fucking screen and surface with ads.
aabdi 28d ago
[dead]
DannyBee 28d ago
Lawyer here - As i explained last time we had a variant of this thread (see comment history if you are interested), this is a very complicated area that people try to make very simple. It doesn't have to be complicated, mind you, but right now the way the law is written is basically: 1. Transmitting sports betting info between states is a federal crime unless it's legal in both states (18 U.S.C. § 1084(a)) 2. The CEA regulations ban contracts that are illegal under state law (17 CFR 40.11) 3. Other forms of gambling/betting/contracts that are not sports are generally a-ok. 4. This is not a case of first impression, it's just getting relitigated because Kalshi doesn't want to follow the actual law. This has actually been pretty settled law for a long time, with new flareups maybe once a decade. Kalshi is just hoping to be treated like Uber was. The third circuit's decision is pretty clearly "out there" in terms of existing caselaw. However, this will end up at SCOTUS, and everything until then just doesn't matter. That will be a coin flip even though it shouldn't be
- 0xbadcafebee 28d ago
  > because Kalshi doesn't want to follow the actual law Correction: because the federal government doesn't want Kalshi to follow the actual law. CFTC ordered Kalshi to continue operating in NY when NY tried to crack down on it. Donald Trump Jr. is a paid advisor for Kalshi. The US Government's conservative leaders are ignoring states' rights in order to personally profit, using Kalshi as a tool. > this will end up at SCOTUS, and everything until then just doesn't matter Unless Congress passes a law so SCOTUS doesn't have to. We can't keep pretending it's normal for SCOTUS to decide everything about our society. If Congress won't do its job, why do we have them?
  - jfengel 28d ago
    We have them because the Founders thought it was a good idea. Then they thought it was a good idea to have two houses with different criteria, giving two chances to quash legislation. Plus the veto. Plus the Supreme Court (whose job they left almost completely undefined, so they made up a job description). So we have them because we can't get rid of them. But they are practically useless. They can usually manage the bare minimum of reauthorizing the thing they said last year. Then they can rename a few post offices, have some grandstanding hearings, and then go home to campaign for reelection.
8note 28d ago
as an argument for sports betting as a market, i remember when the wrong team won the world series, and hadnt setup their correct merch and so on for online sales, and it was a disaster trying to get all the right stuff together to minimize fraud and abuse. if an online sales provider could hedge against the risk of that win, the gamble would help pay for all the chaos as a result
- deleted 28d ago
  [deleted]
- steveBK123 28d ago
  Lots of bespoke insurance already exists. Lloyds will insure your rocket cargo or even provide terrorist strikes. Doesn’t mean we need people wagering at kalshi on “number of terrorism fatalities in London before end of 2025”.
  - Domenic_S 28d ago
    > or even provide terrorist strikes. I'm sorry, Lloyd's will _what_??
    - steveBK123 28d ago
      good point, I missed "insurance against"
  - ketzu 28d ago
    > Doesn’t mean we need people wagering at kalshi on “number of terrorism fatalities in London before end of 2025”. Reminds me of something from the last decade, but I am not sure anymore if it was a discussion or a desceiption: how to structure a "murder for hire" platform to give it plausible deniability/legality by turning it into bets. "I bet $100.000 @ketzu lives to the end of the year" can be read as life insurance, tasteless betting, or as a challenge to someone betting against it. (which is why here you need a legitimate interest to buy life insurance on someone)
  - deleted 28d ago
    [deleted]
fenestella 28d ago
[flagged]
BobbyTables2 28d ago
Looks like Kalshi lost its bet…
johnnyApplePRNG 28d ago
regulated entities mad at unregulated entities, nothing to see here, yawn
- anigbrowl 28d ago
  Actually exactly the reverse
  - johnnyApplePRNG 26d ago
    You think the states are the ones who care? It's the regulated gambling corporations who are rattling their sabres right now.
crossroadsguy 28d ago
(Not American) What does 9th circuit or some circuit court mean? It some name of a specific court, just not the place name? Or is it special kind of court and “9” is some sort of level? Importance or hierarchy related? Escalation level? (Assuming your SC eventually is also at the top like in India)
- deleted 28d ago
  [deleted]
- mayneack 28d ago
  9th is a region (includes California) circuit is a level (appeals court right below Supreme)
- thoughtpeddler 28d ago
  From my hazy recollection from law school, the US appeals courts are called "circuits" because back in the day, they weren't actual buildings but rather judges that would go around town-to-town within their jurisdiction in a horse-drawn carriage 'in a circuit' (that corresponded to a certain geographic area). The name just stuck even after they were permanently enshrined into physical structures (each corresponding to a given region).
- deleted 28d ago
  [deleted]
- apples_oranges 28d ago
  I see a lot of questions here that can be googled or asked with AI chat. Good question, but I also think, why didn’t that person just find out themselves? It’s so easy..
  - jubilanti 28d ago
    This person isn't actually asking a question, they're performing ignorance as a protest to HN's U.S centricness.
  - crossroadsguy 28d ago
eahm 28d ago
All good and cool when they do it and make money, like the lotteries, but when normal people do it nonono, can't happen. That said, I've never touched Kalshi or that other one or the lottery. It's all a scam anyway.

170 points by hungryhobbit 29d ago

hungryhobbit 29d ago

The appeals court found sports betting isn’t shielded by the federal law used to block Kris Mayes’ prosecution.

dcrazy 28d ago
Hope dang comes in with a headline rewrite
- Detrytus 28d ago
  and why would he do that? It is an actual title of the linked article.

gregjw 28d ago

how does anyone regard these things as innovation

jeltz 27d ago
Yeah, the idea is over 25 years old here in Europe and is called "betting exchange". Their only innovation is getting it regulated as commodity trading rather than online gambling.

mullingitover 28d ago

> “Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments when it amended the (Commodity Exchange Act),” Judge Ryan Nelson wrote in the unanimous decision. Incredible that it's taken this long to arrive at the obvious.

EA-3167 28d ago
The law is slow by design, it's deliberative, it's multi-staged, it's escalatory and obsessed with consulting multiple jurists. That can be extremely frustrating until you start looking into how the country would look if individual judges were able to fast-track the whole system. Naturally we'd celebrate the positive outcomes, but the bad ruling would immediately go into effect rather than facing injunction, review, etc. These laws have profound effects and it takes people time to learn about what they pertain to, especially new technology or new ways of using it. It's good to have periods of feedback between the public, the courts, the legislature and the executive branch. The same things that slow down what we most want to happen quickly also slow down the things we desperately want to avoid. "If only the law moved as quickly as an individual" is great until you get a guy like Trump in power.
- pennomi 28d ago
  The law being slow is exactly why a guy like Trump in power is dealing so much damage. Nearly everything he’s done has been illegal, but the decisions often take so long that they have no effect.
- meowkit 28d ago
  Was great when the world ran on horses and whale blubber. The legal system tells itself this noble story of measured action without realizing it actually became the bad guy many decades ago. My brief little opinion here is half informed from dating a lawyer for a few years.
echelon 28d ago
Gambling is a negative externality that needs to be taxed. Gambling takes advantage of the poor, under-educated, and addictive personalities and puts them into financial distress. This places burden on families, the state, and local municipalities. It creates strain on the workforce and deflects legitimate economic activity that would otherwise strengthen the economy. We're a free society. I'm fine with gambling from a personal liberty perspective, but the companies that facilitate and profit need to pay 40-50% of their gross revenue to the government. That's comparable to tobacco. Companies also need to be restricted in how they are able to advertise their vices. Never to children, and never targeted to at-risk personality types. They also need to be tightly regulated and kept from using dark patterns and addictive gotcha mechanics to cause even greater harm to those most at risk.

lokar 28d ago

I wonder what this means for cases under loss recovery acts in states that have them.

delichon 28d ago

> As an example, the court explained that whether the Super Bowl happens is an “occurrence,” but who wins it is not. This level of parsing looks like judicial legislation to me. Isn't it one occurrence if the Rams win and another if the Packers win? Better that they declare the law void for vagueness and give the legislature another shot at it. Guessing what the words mean, when it is not at all clear to professionals let alone to the average citizen does not give proper notification of what the law is to the people subject to it.

mandevil 28d ago
Everyone agreed that this (what the court ruled) was the plain meaning of the law up until Kalshi just decided to go for it. They basically did an Uber on the law, completely ignoring how it had long been interpreted and demanding someone stop them. And only once Kalshi wanted to make money on sports gambling did there start to be parsing like this, to try to argue that sports gambling was legal on a CFTC-regulated exchange. If Kalshi had gotten the law thrown out for vagueness then basically there was a road map for making any law that got in the way of a company making money thrown out for vagueness. The key is that up until a few years ago basically the universal consensus was that sports gambling was not possible on a CFTC regulated exchange, then all of a sudden Kalshi did it and now they are trying to pay enough lawyers to get them to justify it. This ruling is not judicial legislation, this is demanding that companies actually follow the law.
- delichon 28d ago
  Declaring the law void for vagueness would not favor Kalshi. It would undercut the federal preemption that Kalshi is advocating for.
  - jmalicki 28d ago
    Since when has vagueness been considered a bad thing for statutes? It's the foundation of the US (and anglo) legal system and why courts exist, to fill in. And vague statutes that can be interpreted by courts has long been preferred to precise legislated meaning that you seem to prefer. You could live in Germany or France if you prefer a legal system more ruled by clear statute?

morkalork 28d ago

Rem when mafia bookies running sports betting was a subplot on The Soprano's? It wasn't that long ago.

SoftTalker 28d ago
Well they are still doing it.
- adzm 28d ago
  People seem to be blissfully unaware that illegal and underground gambling is still going very strong.
  - vkou 28d ago
    It's easier to be blissfully unaware when the illegal books don't bombard every fucking screen and surface with ads.

aabdi 28d ago

[dead]

DannyBee 28d ago

Lawyer here - As i explained last time we had a variant of this thread (see comment history if you are interested), this is a very complicated area that people try to make very simple. It doesn't have to be complicated, mind you, but right now the way the law is written is basically: 1. Transmitting sports betting info between states is a federal crime unless it's legal in both states (18 U.S.C. § 1084(a)) 2. The CEA regulations ban contracts that are illegal under state law (17 CFR 40.11) 3. Other forms of gambling/betting/contracts that are not sports are generally a-ok. 4. This is not a case of first impression, it's just getting relitigated because Kalshi doesn't want to follow the actual law. This has actually been pretty settled law for a long time, with new flareups maybe once a decade. Kalshi is just hoping to be treated like Uber was. The third circuit's decision is pretty clearly "out there" in terms of existing caselaw. However, this will end up at SCOTUS, and everything until then just doesn't matter. That will be a coin flip even though it shouldn't be

0xbadcafebee 28d ago
> because Kalshi doesn't want to follow the actual law Correction: because the federal government doesn't want Kalshi to follow the actual law. CFTC ordered Kalshi to continue operating in NY when NY tried to crack down on it. Donald Trump Jr. is a paid advisor for Kalshi. The US Government's conservative leaders are ignoring states' rights in order to personally profit, using Kalshi as a tool. > this will end up at SCOTUS, and everything until then just doesn't matter Unless Congress passes a law so SCOTUS doesn't have to. We can't keep pretending it's normal for SCOTUS to decide everything about our society. If Congress won't do its job, why do we have them?
- jfengel 28d ago
  We have them because the Founders thought it was a good idea. Then they thought it was a good idea to have two houses with different criteria, giving two chances to quash legislation. Plus the veto. Plus the Supreme Court (whose job they left almost completely undefined, so they made up a job description). So we have them because we can't get rid of them. But they are practically useless. They can usually manage the bare minimum of reauthorizing the thing they said last year. Then they can rename a few post offices, have some grandstanding hearings, and then go home to campaign for reelection.

8note 28d ago

as an argument for sports betting as a market, i remember when the wrong team won the world series, and hadnt setup their correct merch and so on for online sales, and it was a disaster trying to get all the right stuff together to minimize fraud and abuse. if an online sales provider could hedge against the risk of that win, the gamble would help pay for all the chaos as a result

deleted 28d ago
[deleted]
steveBK123 28d ago
Lots of bespoke insurance already exists. Lloyds will insure your rocket cargo or even provide terrorist strikes. Doesn’t mean we need people wagering at kalshi on “number of terrorism fatalities in London before end of 2025”.
- Domenic_S 28d ago
  > or even provide terrorist strikes. I'm sorry, Lloyd's will _what_??
  - steveBK123 28d ago
    good point, I missed "insurance against"
- ketzu 28d ago
  > Doesn’t mean we need people wagering at kalshi on “number of terrorism fatalities in London before end of 2025”. Reminds me of something from the last decade, but I am not sure anymore if it was a discussion or a desceiption: how to structure a "murder for hire" platform to give it plausible deniability/legality by turning it into bets. "I bet $100.000 @ketzu lives to the end of the year" can be read as life insurance, tasteless betting, or as a challenge to someone betting against it. (which is why here you need a legitimate interest to buy life insurance on someone)
- deleted 28d ago
  [deleted]

fenestella 28d ago

[flagged]

BobbyTables2 28d ago

Looks like Kalshi lost its bet…

johnnyApplePRNG 28d ago

regulated entities mad at unregulated entities, nothing to see here, yawn

anigbrowl 28d ago
Actually exactly the reverse
- johnnyApplePRNG 26d ago
  You think the states are the ones who care? It's the regulated gambling corporations who are rattling their sabres right now.

crossroadsguy 28d ago

(Not American) What does 9th circuit or some circuit court mean? It some name of a specific court, just not the place name? Or is it special kind of court and “9” is some sort of level? Importance or hierarchy related? Escalation level? (Assuming your SC eventually is also at the top like in India)

deleted 28d ago
[deleted]
mayneack 28d ago
9th is a region (includes California) circuit is a level (appeals court right below Supreme)
thoughtpeddler 28d ago
From my hazy recollection from law school, the US appeals courts are called "circuits" because back in the day, they weren't actual buildings but rather judges that would go around town-to-town within their jurisdiction in a horse-drawn carriage 'in a circuit' (that corresponded to a certain geographic area). The name just stuck even after they were permanently enshrined into physical structures (each corresponding to a given region).
deleted 28d ago
[deleted]
apples_oranges 28d ago
I see a lot of questions here that can be googled or asked with AI chat. Good question, but I also think, why didn’t that person just find out themselves? It’s so easy..
- jubilanti 28d ago
  This person isn't actually asking a question, they're performing ignorance as a protest to HN's U.S centricness.
- crossroadsguy 28d ago

eahm 28d ago

All good and cool when they do it and make money, like the lotteries, but when normal people do it nonono, can't happen. That said, I've never touched Kalshi or that other one or the lottery. It's all a scam anyway.