The legal odyssey regarding prediction markets vs. gambling continues. On Friday, Kalshi stumbled onto an island full of giants wearing black robes.

Via the Associated Press, the U.S. Court of Appeals for the Ninth Circuit ruled on Friday that federal commodities-trading law does not preempt Nevada’s gambling law as to the regulation of placing wagers on sports.

The 3-0 ruling becomes the biggest loss to date by the prediction-market industry, and it could set the stage for the inevitable decision from the U.S. Supreme Court resolving the issue one way or the other. Especially since the U.S. Court of Appeals for the Third Circuit has ruled that New Jersey cannot regulate Kalshi.

A split among the various circuits often becomes a key factor in the Supreme Court’s decision to take up a given issue.

As noted by the AP, roughly 20 states currently are involved in litigation over the question of whether prediction markets can offer sports-related contracts independent of their gambling laws.