Kalshi has opened a new appellate front in the fast-developing fight over prediction-market regulation, asking the Second Circuit to review a New York federal court decision that refused to shield the company from state gaming-law enforcement. The appeal raises a central question for event-contract platforms: when a federally regulated derivatives product looks like wagering to state officials, which legal regime controls?

The underlying suit, KalshiEX LLC v. Williams et al, puts that issue squarely before the courts.

The Pennsylvania Supreme Court on Monday delivered a consequential ruling for the state’s gaming industry, holding that the “skill games” that have spread through convenience stores, bars, gas stations, and other locations are slot machines under Pennsylvania law. The practical effect is significant: these machines must be limited to licensed and regulated gambling venues, rather than operating in the gray market that has fueled years of litigation and enforcement disputes.

The decision gives state regulators and law enforcement a stronger legal footing to seize or shut down machines that operators have long argued are materially different from traditional slots because they involve some degree of player skill.