9th Circuit Rejects Kalshi Bid To Block Nevada Prediction Market Ban

Kalshi today lost a major ruling over whether it can evade state gambling laws, as a federal appeals court found that Nevada can stop the prediction market from allowing sports bets. While the Trump administration is trying to help prediction markets avoid state regulation, a panel of three Trump-appointed judges unanimously ruled against Kalshi in today’s decision from the US Court of Appeals for the 9th Circuit. The Nevada Gaming Control Board today said the 9th Circuit “emphatically reject[ed] the view that the federal Commodity Exchange Act preempts application of Nevada’s gaming laws to sports-event contracts offered by Kalshi, Crypto.com, and Robinhood.” Nevada Governor Joe Lombardo, a Republican, said that “prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework.” The judges affirmed a district court order that let Nevada enforce state laws against Kalshi’s sports-related event contracts. “KalshiEX, LLC advertises itself as ‘the first app for legal sports betting in all 50 states,’” wrote Judge Ryan Nelson. “As the volume of activity on Kalshi’s ‘sports betting’ platform ballooned, the Nevada Gaming Control Board sent a cease-and-desist letter notifying Kalshi that it was violating Nevada statutes and gaming regulations. Kalshi sought injunctive relief, arguing that it is not a legal sports betting platform but a designated contract market under the Commodity Exchange Act (CEA) offering legal sports event contracts. Kalshi argues that the Commodity Futures Trading Commission (CFTC) has exclusive regulatory authority over its sports event contracts and, therefore, Nevada’s gaming regulations do not apply.” Sports bets aren’t swaps, judges rule As in other cases involving Kalshi and state gambling laws, the key legal issue is whether a sports bet on a prediction market meets the definition of a “swap” that can only be regulated by the CFTC. The 9th Circuit ruling conflicts with a 3rd Circuit decision against New Jersey, which found that sports wagers on prediction markets are swaps. The circuit split increases the likelihood that the Supreme Court will take up the issue.

“Prediction Markets,” Gambling, the CFTC & Regulation: Facts, Fiction & The Law Introduction Since 2022, Better Markets has been deeply engaged in the debates over so-called “prediction markets,” first at the Commodities Futures Trading Commission (CFTC) and then in the courts, media, at other agencies, and now virtually everywhere. Better Markets materials and information touch on virtually all aspects of these debates. They are available below with hyperlinks for ease of reference after this introduction. Here are the top 10 points to keep in mind: These “prediction markets” are just a way for people to gamble with what are called “event contracts,” which are being offered by large financial firms such as Kalshi, Polymarket, and Crypto.com because they are trying to avoid the longstanding state regulation of gambling. These activities are no different in substance than gambling at a casino, sportsbook, or corner bookie, which is why “prediction market” users can bet on everything from elections and sporting events to the Golden Globes and the return of Jesus Christ. These companies have unleashed unregulated nationwide gambling without the involvement or review by any elected official, regulator, or policymaker, even though there is a very significant public interest in properly regulating gambling to keep criminals out, prevent minors from engaging in gambling, prohibit the use of nefarious gamification and AI deepfakes, deal with addiction and other social consequences like alcoholism, drug abuse, bankruptcy, spouse and child abuse and other anti-social activities often associated with gambling. The CFTC is a federal financial regulatory agency with no experience, expertise, personnel, technology, or budget to police gambling in all 50 states covering an unlimited number of topics, and trying to do so will distract the CFTC from its critical mission of policing the multi-trillion-dollar derivatives and commodities markets. All Americans depend on the CFTC to make sure that everyday essentials from cereal at breakfast and bread for lunch sandwiches to gas for the car and oil to heat a home are available at the right time, in the right quantities, and fairly priced based on supply and demand. The futures, options, and swaps subject to CFTC regulation are supposed to have genuine financial utility and a legitimate hedging function. Sport wagering event contracts don’t fill those roles. Moreover, in 2011, the CFTC flatly banned all event contracts that involve war, assassination, terrorism, gaming, or any activity that is unlawful under any State or Federal law. That means that the sports wagering event contracts so prevalent today are actually unlawful, as they involve “gaming.” As has been recently seen, these companies are now also offering event contracts that involve war, assassination, and terrorism, including involving military action in Venezuela, Iran, and elsewhere. Congress stated explicitly that the gambling going on now via event contracts was prohibited. When this authority was being debated in Congress, Senator Blanche Lincoln, then chair of the Senate Agriculture Committee, said that the intention was not to “enable gambling through supposed ‘event contracts,” including any event contracts on “sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament.” Before it flip-flopped, Kalshi itself admitted this in multiple court filings. When it wanted to defend its election betting contracts, it was quick to dismiss sports betting as merely a form of entertainment, with no “independent significance” or “economic risks.” Kalshi went further and flatly admitted that “Congress did not want sports betting to be conducted on derivatives markets.” Prediction market operators claim they are not casinos because people are not betting against them and so they are “not the house”; they are just bringing betters together and earning their revenue through fees. But that’s no different than casinos that bring poker players together and then take a percentage of the pot. Prediction market operators also claim that event contracts on sports, politics, and pop culture are legitimate financial instruments because people can use them as a hedge against risk. But these types of wagers cannot serve as real tools for hedging financial risk, and there is little if any credible evidence that Americans actually use them for that purpose. Moreover, the implication of this argument is that all bets are actually financial hedging devices, which means even traditional sportsbooks should be regulated by the CFTC, which does not make any sense. The potential for insider trading on these platforms is enormous. Anyone with inside information about an event can use that information to profit. And because there is always someone taking the other side of the bet, these insiders are profiting at the expense of bettors who think they have a fair shot to win their bet when they don’t. The bottom line: much of the gambling being done via event contracts is directly against the law, and the intent of the statute, and all of it is far beyond anything the CFTC was designed or intended to do. Moreover, in a democracy, private profit-maximizing financial firms should not be allowed to unleash unregulated nationwide gambling without elected officials reviewing, deliberating, and deciding how and under what circumstances such activities should be allowed, if they are allowed at all. Most Important/Critical Better Markets Resources Critical resources for understanding the state of play when it comes to prediction markets, sensible rulemaking and appropriate oversight, and where we go from here. What prediction markets are, why they’re gambling, why most are unlawful under the CEA, why the CFTC isn’t equipped to police nationwide gambling, and broad consumer/public‑interest harms. Congress Did Not Intend Sports Betting In Derivatives Markets Sports contracts, pop‑culture wagers, scandals, and the legal point that Congress didn’t intend sports betting in derivatives markets—plus Kalshi’s prior admissions. Regulatory Capture, Enforcement Failures, and CFTC Oversight CFTC capacity limits; questionable approvals; Polymarket/QCX; IG/ethics issues; FOIA requests; and the risk of diverting the CFTC from its core mission. What’s At Risk When Unregulated Gambling Is Unleashed Nationwide—and Beyond Selected Better Markets media appearances and commentary on growth of prediction markets, social normalization, retail investor harm, 24/7 trading culture, and the public interest.

A federal appeals court on Friday rejected Kalshi's efforts to stop Nevada from regulating speculation on sporting events on its platform, handing states an important win in the battle over which level of government has authority to oversee the rapidly growing prediction-markets business. The 9th Circuit Court of Appeals said Kalshi failed to show that the 1936 Commodity Exchange Act, which regulates commodity futures trading, preempts Nevada gambling laws and bars the state from regulating wagers related to sporting events. Those prediction market contracts are not federally regulated "swaps" but rather sports bets, the court said. "The substance of the sports event contracts offered on Kalshi's DCM [designated contract market] is sports gambling, regardless of whether Kalshi calls them swaps," Ryan Nelson, one of the 9th Circuit judges, wrote in the court's opinion. State and federal turf war States are locked in an with the federal government over which level of government has primary regulatory oversight of prediction markets, which allow users to bet on the outcomes of sports, elections and many other events.Roughly 20 states are involved in litigation over prediction markets, and experts say the battle is likely to wind its way to the Supreme Court. A separate decision in April reached a different conclusion than Friday's decision, with the 3rd U.S. Circuit Court of Appeals ruling that the Commodity Futures Trading Commission, a government agency that regulates derivatives markets, has exclusive control over sports-related event contracts on Kalshi. "The 9th Circuit agreed with the 3rd Circuit on a fundamental point: Federal law prevents states from regulating trading on a federally licensed exchange, like Kalshi," Kalshi spokesperson Dani Lever said in an email. "Despite the 9th Circuit's opinion, we still believe the CFTC regulations, as written, do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review." The Nevada Gaming Control Board said the ruling "vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state." Dominick Freda, legal director of Better Markets, a nonprofit advocacy organization focused on financial reform, said in an email that the 9th Circuit's decision is a "decisive win for the rule of law and for every state that has built a regulatory regime to protect its residents from gambling harms."

The 9th U.S. Circuit Court of Appeals rejected prediction market platforms' requests for injunctive relief against the Nevada Gaming Control Board, concluding that sports-related event contracts are not a derivative regulated by the federal government. The court rejected appeals by Kalshi and Crypto.com, two prediction market platforms, to stop Nevada from halting their operations which the state claims are gambling offerings outside of the gaming control board's framework. The court also ruled against Robinhood's request for injunctive relief. That firm also features event contracts on its trading platform. Under scrutiny were the platforms' sports-related event contract offerings, which 44 states argue are nothing more than sports betting. However, the platforms — and their federal regulator, the Commodity Futures Trading Commission — claim all event contracts, no matter the topic, are swaps. Swaps are a type of derivative under the purview of the CFTC, and the agency asserts that it has the exclusive jurisdiction to regulate all event contracts. The CFTC has even sued nine states to defend what it believes is its sole right to make rules for prediction markets. But the 9th Circuit rejected that argument. "The sports event contracts were not 'swaps' because they were sports bets," the court said in its opinion against Kalshi. The Nevada Attorney General's office said the ruling was a major victory. "Kalshi sought to sidestep Nevada's gaming laws by claiming its sports wagering products were federally regulated financial instruments beyond the reach of state regulators," deputy communications director for the office Alcinia Whiters said in a statement. "The Ninth Circuit rejected that argument and made clear what we have maintained from the beginning: sports betting does not become something else simply because a company calls it an 'event contract' ... Our office is proud to have defended Nevada's authority." In a statement to CNBC, a CFTC spokesperson said that the court understood that swaps are exclusively regulated by the commission, but said it was wrong to believe that sports-related event contracts don't fall under that definition. "A derivative contract structured as a swap is a swap regardless of the underlying subject matter — the only exceptions in statute are onions and movie box office receipts," the spokesperson said in a statement. "The Ninth Circuit erred today when it invented a new and atextual exception to the CEA," referring to the Commodity Exchange Act, the law that details which event contracts the CFTC is allowed to permit and reject. Legal experts have widely expected that the question of sports-related event contracts, and whether state gaming regulators or the CFTC has the right to regulate them, will eventually reach the Supreme Court. That now appears very likely, as the 9th circuit's decision contradicts a ruling from the 3rd U.S. Circuit Court of Appeals in early April. In that case, the 3rd Circuit ruled that only the CFTC has the jurisdiction to regulate sports-related event contracts. "This is a classic circuit split," said Joshua Mitts, a professor at Columbia Law School. Circuit splits are when federal appeals courts rule differently on the same topic. "Ultimately, this is the kind of legal controversy or legal difference of opinion which will make its way to the Supreme Court." Kalshi's head of litigation, Jovy Dedaj, in a post on X wrote that the 9th and 3rd Circuit's decisions agreed that federal law stops states from regulating federally licensed exchanges, but said the 9th Circuit overstepped by declaring sports-related event contracts not as swaps. He added Congress gave the CFTC the power in the Commodity Exchange Act to determine if event contracts related to "gaming" are contrary to the public interest, not states. In a statement, Robinhood said it plans to appeal the decision. "Every eligible customer should have access to these markets, which are federally regulated by the CFTC and offered through our CFTC-registered Futures Commission Merchant," a spokesperson said. Crypto.com did not respond to a request for comment. Meanwhile, shares of two online sportsbooks, DraftKings and Flutter Entertainment — the parent company of FanDuel — rose in response to the ruling. Both stocks have been hit in the last year over concerns of prediction markets disrupting the industry, and the companies have rushed to get their own prediction market exchanges online. DraftKings jumped 7%, while Flutter was up more than 6%. Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.

A federal appeals court ruled Friday that states can regulate prediction markets like gambling, dealing a major blow to the booming industry. There are still related lawsuits pending across the country, and legal experts believe the matter will ultimately be settled by the Supreme Court. But Friday’s ruling from the Ninth Circuit Court of Appeals is the largest courtroom victory to date for the states as they seek to regulate prediction sites. The 3-0 ruling came from a panel of three Trump-appointed judges. The case originated from Nevada, where regulators tried to shut down the Kalshi prediction site. On prediction sites like Kalshi and Polymarket, users can wager on nearly everything, from sports to culture, award shows, album releases, the weather, the value of gold, and beyond. With the backing of the Trump administration, prediction markets have been operating as federally regulated financial exchanges. They get licenses from the Commodity Futures Trading Commission to offer “event contracts, which is a type of derivative swap. But a staggering 44 states have argued that these platforms are, in fact, gambling and should be subjected to state gaming laws and taxes. “The substance of the sports event contracts offered on Kalshi’s (exchange) is sports gambling, regardless of whether Kalshi calls them swaps,” the appeals panel wrote Friday, adding that “Kalshi’s attempts to distinguish its sports event contracts from sportsbooks betting are unpersuasive.” The judges also said it was “disingenuous” for Kalshi to argue in court that its products weren’t sports-betting when it previously used that phrasing in marketing materials. CNN has a partnership with Kalshi and uses its data to cover some major events, but editorial employees aren’t allowed to use prediction sites. Kalshi vows appeals Kalshi condemned the ruling Friday and said it would pursue appeals. “Despite the Ninth Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations,” Kalshi spokeswoman Dani Lever said in a statement. “We will be seeking further review.” The case came after Nevada regulators tried to crack down on Kalshi and other prediction sites operated by Crypto.com and Robinhood. Nevada Gov. Joe Lombardo, a Republican, said in a statement that the ruling would help “safeguard the integrity of our gaming industry.” Mike Dreitzer, chair of the Nevada Gaming Control Board, said in a statement: “This completely vindicates what we have been saying all along.” A looming SCOTUS showdown? The ruling Friday creates a circuit split, with dueling rulings on the same question, teeing up the issue for potential Supreme Court review. This year, the Third Circuit Court of Appeals sided with prediction sites, halting New Jersey’s attempt to apply its state gaming laws against the companies. Lawyers for New Jersey have said they plans to take that case to the Supreme Court. “It’s the first ruling against Kalshi at the appellate level, and the opinion seemed to be pretty brutal for the company,” said Dustin Gouker, an independent journalist who covers the prediction industry. “This gets us one step closer to an almost inevitable Supreme Court case on the legality of sports event contracts.” In the meantime, the Nevada ruling could pave the way for other states to shut down Kalshi. The Ninth Circuit is now binding legal precedent for federal judges in California, Arizona and six other states that have pushed for more regulation. As the legal cases have played out, prediction sites have exploded in popularity this year. Kalshi now sees billions of dollars in weekly trading volume, mostly from sports markets. CNN has also reached out to Polymarket for comment. Polymarket was not part of the lawsuit, but it is the second-largest prediction site in the United States.

A federal appeals court delivered a blow to Kalshi in its fight over sports betting in Nevada. The Ninth Circuit issued a decision that calls into question one of the platform’s central arguments: that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over its contracts, which would shield it from state gaming regulation. The ruling opens an uncomfortable front for the company, which has built much of its expansion on the premise that its event markets are federally regulated financial instruments and not bets subject to each state's gaming laws. If that protection is weakened, the business model of prediction-market platforms would be exposed to a patchwork of state regulators. Kalshi’s judicial setback and the dispute with Nevada The legal battle pits Kalshi against Nevada authorities, the state that hosts the United States’ largest regulated gambling industry. Local regulators contend that the platform’s contracts tied to sports outcomes are, in practice, bets, and therefore must be subject to state licenses and oversight. Kalshi has responded by leaning on the Commodity Exchange Act, which grants the CFTC authority over derivatives markets. Its thesis is that, because it is registered with that federal agency, no state can prohibit or condition the offering of its contracts. Kalshi’s Ninth Circuit setback complicates that reading by signaling that the alleged CFTC exclusivity is not as absolute as the company contends. The ruling does not definitively end the litigation, but it sets a unfavorable tone for the platform in a key jurisdiction. An adverse ruling in a court of this level often conditions how other states, which are watching the precedent closely, pursue litigation. Why this matters for prediction markets Prediction markets are experiencing strong growth in the United States, driven by the volume generated by sports events, elections, and other binary-outcome events. Kalshi has positioned itself as a leading player, alongside platforms that operate on blockchain, and the regulatory question is the biggest risk weighing on all of them. The friction point can be summarized simply: if contracts on sports outcomes are considered financial derivatives, they fall under a single relatively permissive federal umbrella; if they are considered wagers, they fall under state gaming commissions, with very different requirements, licenses, and taxes in each territory. Nevada, with its casino industry, has a direct interest in defending that second interpretation. The state’s stance is that allowing sports contracts without a gaming license would create a path to circumvent decades of regulation built around gambling. A clash between federal and state regulators The case illustrates a broader tension in the United States about who governs when a financial product resembles something else. The same debate over jurisdiction between federal agencies and local authorities runs through much of the regulation applied to digital asset platforms, where a lack of clear rules leaves companies exposed to conflicting interpretations. For Kalshi, the uncertainty is not minor. The company has aggressively rolled out its sports-event contracts across the country, and several states have issued cease-and-desist orders. The firm’s strategy has been to take those disputes to federal courts, betting that CFTC jurisdiction will prevail. The Ninth Circuit has just reminded it that that outcome is not guaranteed. What could come next The litigation will continue in lower courts, and it is possible that the matter could escalate to higher courts given the relevance of the jurisdiction issue. In the meantime, the decision adds pressure to a sector that is growing faster than its legal framework is advancing. For investors and users of these platforms, the takeaway is one of caution. The long-term viability of sports-focused prediction markets depends, to a large extent, on how this fundamental question is resolved: whether they are finance or gambling. The Nevada setback tilts the balance, at least for now, toward an answer Kalshi would prefer to avoid. The outcome will have consequences beyond a single company. It will define the ground on which all prediction markets in the United States can operate, including those that rely on blockchain technology to settle their contracts in a decentralized manner.

Skip to content Latest news It’s a Nvidia day: watch the largest company on earth post a record profit right at market open Live updates August 26, 2026 Kalshi Battle in the Sports Betting Space Extends to Another U.S. State August 27, 2026 — Regulation Which chains should be used: networks will become specialized in a single, highly liquid mission in 2026 August 27, 2026 News The quantum-safe Bitcoin transaction from StarkWare reaches the mainnet August 27, 2026 Digital currencies Tailored for you Which chains should be used: networks will become specialized in a single, highly liquid mission in 2026 August 27, 2026 News The quantum-safe Bitcoin transaction from StarkWare reaches the mainnet August 27, 2026 Digital currencies SoftBank eyes a $6 billion deal with a humanoid robot acceleration program August 27, 2026 — Technology Kalshi Battle in the Sports Betting Space Extends to Another U.S. State By Aishish Kumar • 4-minute read • published August 27, 2026 !Kalshi Battle in the Sports Betting Space Extends to Another U.S. State Connecticut filed a lawsuit against Kalshi, alleging that its athletic event contracts are unlicensed sports bets and not federally protected derivatives. Prediction markets have seen a boom: market size grew from about $2 billion to $38.5 billion in a single year. This dispute could determine whether state gambling laws or the federal derivatives regulatory framework govern nationwide prediction markets. Connecticut filed a lawsuit against Kalshi on Wednesday, August 26, challenging the validity of multiple Kalshi contracts related to sports events, adding a new dimension to a legal fight that could affect the trajectory of crypto-related prediction markets in the United States. The state filed the suit in Hartford Superior Court under the name "Connecticut v. Kalshi X, LLC.,” Case No. HHD-CV-26-6230345-S. The Kalshi lawsuits show that Kalshi moved the case to federal court on the same day under Case No. D. Conn. No. 3:26-cv-01382. This dispute is not limited to Connecticut; it extends far beyond. Thanks to a mix of crypto-focused platforms and funding, prediction markets have grown rapidly, despite differing settlement mechanisms across platforms. Artemis data indicate that total trading volume in the prediction market rose from about $2 billion on August 1, 2025, to $38.5 billion on August 1, 2026, more than 19-fold in just one year. This has significant legal implications for crypto markets on two fronts: first, if states classify digital asset products as gambling, access to these products may be restricted, and liquidity may vary by jurisdiction. Second, the application of the federally coordinated derivatives framework would put crypto platforms under a unified nationwide regime. Why is the Hartford lawsuit important for crypto traders? Since 2020, Kalshi has been one of the exchange-traded market participants (DCMs) under CFTC oversight. Its position has been clear: under the Federal Derivatives Act, the CFTC oversees its contracts related to events, and therefore states cannot treat these contracts as bets. Connecticut disagrees with this interpretation. For crypto traders, the dispute goes beyond regulatory procedures. Artemis data for the week ending August 23, 2026 show Kalshi processed roughly $9.10 billion in total trading volume, including almost $1.87 billion tied to crypto markets. That represents about 20.6% of Kalshi’s weekly trading volume. By contrast, Polymarket logged roughly $2.04 billion in total trading volume in the same period, with about $224.2 million, or 11.0%, in crypto markets. Although Kalshi conducts event contracts in USD, the broader prediction market industry is increasingly tied to crypto infrastructure. Kalshi allows crypto deposits and withdrawals, while Polymarket relies on stablecoin-backed collateral on the blockchain. If governments begin isolating their citizens, the overall market size for this industry could shrink significantly. How did Connecticut’s case reach this point Connecticut’s issue with Kalshi began before the current suit. In December 2025, the state’s Department of Consumer Protection ordered Kalshi, Robinhood, and Crypto.com to cease providing Kalshi’s sports events in-state. The following day, Kalshi sued state officials, arguing that its markets, governed by federal law, were not subject to state gambling laws. To date, the case has faced court hurdles. On August 10, U.S. District Judge Vernon Oliver declined a Kalshi motion to dismiss. Kalshi appealed the ruling. Accordingly, the case was moved to a higher court under Kalshi X LLC v. Caverly, No. 26-2239, filed August 12. According to Governor Ned Lamont, the current lawsuit is tied to Connecticut’s sports betting regulations adopted by lawmakers in 2021, intended to create a “safe and responsibly regulated market for Connecticut consumers, not to open the floodgates to a wild west of sports betting.” Connecticut filed a suit to shut down the platformKalshi’s response: Joif Dedej, chief of litigation at Kalshi, expressed frustration with Connecticut’s “capricious and inconsistent” enforcement approach in a post on X, noting that similar prediction markets remain active in the state. Dedej wrote, “This equal treatment is precisely the reason federal oversight is needed.” The CFTC joined the nationwide confrontation Connecticut is only part of a broader clash between states and the federal government. Washington imposed initial restrictions on Kalshi, Baltimore sued Kalshi and Polymarket, Arizona moved to press criminal charges, and Illinois’s action to halt operations is now part of a federal dispute over priority. Jurisdiction | Primary Action and Date | Primary Filing | Status/Outcome as of August 27 Connecticut | State sued Kalshi on August 26, 2026; Kalshi had already appealed the federal injunction denial on August 10 | Hartford HHD-CV-26-6230345-S; 2nd Cir. 26-2239 | The Second Circuit appeal is pending; the new action has been moved to a Connecticut district court, 3:26-cv-01382. Washington | State sued on March 27; final preliminary injunction issued in August | King County Superior Court 26-2-10264-3 SEA; temporarily transferred to WD Wash. 2:26-cv-01062 | The federal court remanded the case to the lower court in May. August ruling requires Kalshi to suspend activities in sports, elections, politics, entertainment, culture, technology, and science realms, and implement geolocation. Baltimore | City filed separate complaints against Kalshi and Polymarket on August 13 | Kalshi: C-24-CV-26-005532, removed to D. Md. 1:26-cv-03217; Polymarket: C-24-CV-26-005535, removed to 1:26-cv-03253 | Both cases are now before the federal court; no ruling on the merits of the August complaints. Arizona | Arizona AG filed a 20-count criminal indictment against Kalshi in March | Arizona 2:26-cv-01715 | A federal judge on May 5 issued a preliminary injunction in favor of the CFTC blocking Arizona from enforcing its gambling laws against event contracts on commodity futures platforms regulated by the CFTC. Illinois | The Gaming Board sent a letter to Kalshi demanding it stop operations on April 1, 2025; the CFTC filed suit against the state on April 2, 2026 | ND Ill. 1:26-cv-03659 | The CFTC’s federal challenge remains pending. The CFTC has upheld Kalshi’s jurisdictional argument. In April, it filed suit against Connecticut, Arizona, and Illinois, arguing that states cannot impose gambling restrictions on futures-tracked markets regulated federally. Kalshi is valued at $22 billion, reflecting investor bets on this broader future. Thus, the ongoing legal fight over whether these products are financial derivatives or gambling is also a fight over the size of the prediction market tied to crypto. The sharpest minds in crypto are already following our newsletter. Do you want to join them? Join us. FAQs Connecticut seeks a court order to prevent Kalshi from offering unlicensed sports events, which Attorney General William Tong says are indistinguishable from gambling and fall under the state’s consumer protection laws. Kalshi argues that because the CFTC granted it designated market status in 2020, the Federal Derivatives Act gives the CFTC exclusive authority, and Connecticut gambling laws do not apply to it. Monthly trading volume in prediction markets rose from about $1.2 billion in early 2025 to more than $20 billion by January 2026, according to TRM Labs, with crypto-related contracts accounting for about 20% of Kalshi’s trading volume in early August 2026. CFTC, Connecticut, Crypto Kalshi Share this article Disclaimer: The information here is not investment advice. Cryptopolitan bears no responsibility for any investments made based on the information on this page. We recommend independent research and/or consulting a qualified professional before making investment decisions. Aishish Kumar Aishish Kumar Aishish Kumar is a journalist specializing in crypto and finance, with eight years in newsrooms. He covers crypto market news, regulation, DeFi, and trading platforms. Previously with Coind ape, Todayq, and Newsroompost. Holds a postgraduate degree in English journalism from the Indian Institute of Mass Communication (IIMC). Has interviewed notable figures in the space, including Arthur Hayes, Yats Sun, Austin Feidra, and others. Table of contents 1. Why is the Hartford lawsuit important for crypto traders? 2. How did the Connecticut case reach here 3. 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A United States appellate court ruled this Friday that the states have authority to regulate prediction markets, a setback for companies like Kalshi that contend the products they offer are subject to federal regulations. The Ninth Circuit Court of Appeals sided with Nevada’s gambling regulator, the Nevada Gaming Control Board, which sought to keep Kalshi's platform closed, arguing that Kalshi's sports-prediction contracts fall under its purview and not the federal government. At the center of the debate are a type of product offered on prediction markets, within the so-called "event contracts" that allow people to bet on the future outcome of almost any event, and which refer to sports events that regulators in the states consider "sports betting." Kalshi has been blocked in Nevada since March for this reason and, along with other companies in the sector, had asked the courts to pause the veto order; but following this ruling, which contradicts a prior one, the case is expected to continue its legal course and possibly reach the Supreme Court, according to CNBC. Official reactions Nevada’s Attorney General celebrated the appellate court decision and argued that "sports betting does not become something else simply because a company calls them event contracts." Prediction companies maintain that activity should be regulated by the United States Commodity Futures Trading Commission (CFTC), a federal agency, and U.S. President Donald Trump has defended its growth potential and its regulation at the federal rather than state level. However, the appellate judges noted in today’s decision that "the substance of the sports contracts offered by Kalshi is a sports bet, regardless of what Kalshi calls it, whether as 'swaps' or another name for these financial derivatives." The ruling contradicts an earlier order from the Third Circuit Court of Appeals, which held that the authority to regulate sports contracts lay with the CFTC. In late July, 44 states reached agreement—excluding a few governed by Republicans—on their authority over sports contracts in a letter sent to the CFTC during the public-comment period for the new regulations of these products. "The CFTC should start from scratch with its regulations and clarify that sports betting and gambling cannot be traded on (designated contract markets) but are subject to state laws," they stated in the letter, as cited by CNBC.

LAS VEGAS (FOX5) — Nevada’s top legal officer has won a major court battle against popular online trading and crypto apps that try to offer sports betting without a state license. The Ninth Circuit Court of Appeals ruled that online platforms like Kalshi, Crypto.com, and Robinhood must follow Nevada’s strict gambling laws if they want to offer what they call “sports-event contracts”—which let users bet on the outcomes of games. These apps tried to argue they aren’t actually gambling sites. Instead, they claimed to be “financial markets” regulated by the federal government, which they argued put them beyond the reach of Nevada state regulators. The court rejected that argument completely. MORE ON FOX5: Lombardo requests Presidential emergency declaration from Trump over Hawk Fire What is an “event contract” anyway? In simple terms, an event contract is a “yes or no” bet on a real-world event. For example: “Will the Las Vegas Raiders win this Sunday?” If you think yes, you buy a contract. If they win, you get paid. If they lose, you lose your money. While the apps argue this is just a modern financial tool, Nevada Attorney General Aaron D. Ford pointed out that if it looks like sports betting and acts like sports betting, it is sports betting. What does this mean for Nevadans? Because Nevada has some of the strictest gambling rules in the country to protect consumers, the state requires any company offering sports bets to have a local gaming license. Now that the court has backed Nevada, these apps cannot legally offer these sports bets to people inside the state without getting a gaming license first. Nevada has already cracked down on these platforms. Earlier this year, the state ordered sites like Polymarket, Coinbase, and Kalshi to stop operating here. In response, Kalshi had to set up “geofencing” technology—which uses location data to block anyone physically inside Nevada from using their app to make these prohibited bets. “Sports betting does not become something else simply because a company calls it an ‘event contract,’” Attorney General Ford said. “Nevada has built the gold standard for gaming regulation, and we will not allow companies to operate outside the law.” Copyright 2026 KVVU. All rights reserved.

Nevada can ban the prediction market platform Kalshi from operating in the state, the 9th U.S. Circuit Court of Appeals ruled Friday. In March 2025, the Nevada Gaming Control Board sent a cease-and-desist letter to Kalshi, arguing that the company operated a sports betting platform in the state, in violation of Nevada gaming regulations. Kalshi disagreed, characterizing itself as a "designated contract market" (DCM) that offers legal sports event contracts, or "swaps." Nonetheless, its own marketing copy advertised Kalshi as "the first app for legal sports betting in all 50 states," according to the ruling. You May Also Like "The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps," Judge Ryan D. Nelson wrote in the opinion. The judges' unanimous 3-0 decision spells trouble for Kalshi and other prediction market companies that allow people to effectively gamble on sports. "This completely vindicates what we have been saying all along," Mike Dreitzer, Nevada Gaming Control Board Chairman, said in a statement. "This is sports betting and needs to be properly regulated by the state." Kalshi spokeswoman Dani Lever said the company will seek further review, according to the Nevada Independent. At the heart of the matter is whether, as Kalshi argued, the Commodity Exchange Act, a federal law that regulates the trading of commodity futures, preempts state gaming regulations as they apply to swaps. The 9th U.S. Circuit Court of Appeals concluded the CEA didn't preempt state regulation. Still, a separate earlier decision from Philadelphia's Third Circuit backed Kalshi's position. Zach Fulton, a spokesman for the Commodity Futures Trading Commission, the federal regulatory agency for the industry, told the New York Times that the 9th U.S. Circuit Court of Appeals "erred" in its decision. "The Ninth Circuit has now teed up a circuit split that calls out for resolution by the Supreme Court," he said. Rebecca Ruiz is a Senior Reporter at Mashable. She frequently covers mental health, digital culture, and technology. Her areas of expertise include suicide prevention, screen use and mental health, parenting, youth well-being, and meditation and mindfulness. Rebecca's experience prior to Mashable includes working as a staff writer, reporter, and editor at NBC News Digital and as a staff writer at Forbes. Rebecca has a B.A. from Sarah Lawrence College and a masters degree from U.C. Berkeley's Graduate School of Journalism.

Aug 28 (Reuters) - A federal appeals court said Kalshi cannot block Nevada gaming regulators from overseeing its prediction markets platform, raising the stakes in a nationwide battle over whether such platforms allow illegal gambling and who may regulate them. In a 3-0 decision, the 9th U.S. Circuit Court of Appeals in San Francisco said Kalshi was unlikely to show that the federal Commodity Exchange Act preempted Nevada from requiring a gaming license to offer contracts that let people bet on the outcomes of sports events. Sign up here. Friday's decision creates a split with the 3rd U.S. Circuit Court of Appeals in Philadelphia, which in a divided April 6 ruling said New Jersey cannot regulate Kalshi's platform. It increases the possibility that the Supreme Court may eventually decide whether states or the U.S. Commodity Futures Trading Commission should regulate the fast-growing prediction markets industry. The CFTC, under Republican President Donald Trump, has claimed exclusive oversight of prediction markets and challenged regulatory activity in nine states, including New York. At least four states — Nevada, Massachusetts, Michigan and Washington — have won court orders restricting Kalshi's activities. New Jersey has until September 3 to appeal the 3rd Circuit decision. Kalshi and the CFTC did not immediately respond to requests for comment. "The court confirmed what has been clear since the beginning — that states regulate sports betting, and the CFTC has nothing to do with it," said Nicole Saharsky, a lawyer with Mayer Brown who argued the case for the Nevada Gaming Control Board. Prediction markets offered by Kalshi, Polymarket, Coinbase (COIN.O), Gemini Titan (GEMI.O) and others have soared in popularity since the U.S. presidential election in 2024, when they fared better than pollsters in predicting Trump's victory over Democrat Kamala Harris. Though best known for allowing sports wagers, Kalshi's platform alone also lets people wager on elections, economics, the weather and cultural events such as who will win the Oscars. CFTC NOT A NATIONAL GAMBLING REGULATOR, JUDGE SAYS Kalshi and the CFTC have said sports event contracts are "swaps" under the 2010 Dodd-Frank financial reforms, affording the agency oversight through its authority to regulate national swaps markets. Circuit Judge Ryan Nelson, however, said Kalshi's contracts have the hallmarks of sports betting, "a quintessential form of gambling" that the CFTC does not regulate. He also said Kalshi even advertised itself as "the first app for legal sports betting" in all 50 U.S. states. "It is difficult, then, to conclude that Congress intended to upend its decades of careful regulation of gambling based on broad definitions of the words used in a Wall Street Reform Bill," Nelson wrote. "The CFTC is not a national gambling regulator," Nelson added. "No one suggested it was until over a decade after the law was passed.“ All three judges on Friday's panel are Trump appointees. The appeals court judges who decided the New Jersey case were appointed by Republican presidents. "Calling a sports bet a 'swap' doesn't make it one," said Arizona Attorney General Kris Mayes, who in March filed criminal charges accusing Kalshi of running an illegal gambling business. "Financial reform legislation was never intended to strip states of their traditional police power over gambling, and I'm glad the court said so clearly." Friday's decision upheld a November 2025 ruling by Chief Judge Andrew Gordon in Las Vegas federal court, dissolving an injunction from seven months earlier that let Kalshi continue offering sports event contracts in Nevada. Gordon's original injunction did not address Kalshi's election contracts, which Nelson said are illegal under Nevada law and a much smaller part of Kalshi's business. The appeals court returned the case to him to review those contracts. Reporting by Jonathan Stempel in New York and Nate Raymond in Boston; Editing by Cynthia Osterman Our Standards: The Thomson Reuters Trust Principles.

Does federal derivatives law preempt state gaming regulations when a prediction market lists sports-related contracts as swaps? In KalshiEX, LLC v. Assad, the Ninth Circuit said no, at least for now, ruling that Kalshi had not shown that the Commodity Exchange Act (CEA) likely preempts Nevada’s gaming laws. The court therefore allowed Nevada to resume enforcement of its gaming laws against Kalshi’s sports event contracts. Are Sports Contracts “Swaps”? The Ninth Circuit acknowledged that the CEA gives the Commodity Futures Trading Commission (CFTC or the Commission) exclusive authority over “swaps” traded on a designated contract market. However, the threshold question in this case was whether Kalshi’s sports contracts are swaps. The court concluded that these sports contracts are likely not swaps.[1] First, turning to the definition of “event” in “event contract,” although “event” could be read broadly enough to include a game’s outcome, the court stressed that the statutory meaning “does not always turn solely on the broadest imaginable definitions” of individual words.[2] In ordinary usage, the court reasoned, the Super Bowl is an event, while the winner, point spread, or number of touchdowns is the event’s outcome. Echoing Shakespeare’s observation that “a rose by any other name would smell as sweet,”[3] the court was equally direct that “[t]he substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps.”[4] However, Kalshi’s event contracts were self-certified as swaps, are listed as swaps, and currently trade as swaps on a CFTC-registered designated contract market. If these contracts are not swaps, it is unclear how they could lawfully trade on a DCM at all. The court does not fully address this tension. Kalshi argued that sports outcomes carry economic consequences for broadcasters, advertisers, sponsors, franchises, and local communities. However, the court found that this theory was too broad. If any downstream economic effect were sufficient, the definition of swap would become “so broad as to be meaningless.”[5] The court noted that if sports contracts are swaps simply because payment depends on a game outcome, then ordinary off-exchange sports bets could also fall within the statutory definition of a swap. Extending this logic further, the court reasoned that bets on “bingo games” and “ping pong matches” could potentially fall under the CFTC’s jurisdiction.[6] The court further examined statutory context, noting that swaps ordinarily transfer financial risk associated with rates, currencies, commodities, securities, or similar interests. Kalshi’s contracts, by contrast, “do not help institutions or investors hedge against risk; they create risk, largely for ordinary consumers, where none previously existed.”[7] Finally, the court emphasized that gambling has historically been regulated by states and tribes. It found it implausible that Congress quietly transferred nationwide authority over sports gambling to the CFTC through the broad language contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act. As the court put it, Congress did not “take a wrecking ball to all sports gambling regulations built up over decades” when it expanded the CEA’s definition of swap.[8] The Ninth Circuit’s statement regarding gambling regulations being “built-up over decades” belies the fact that states only received authority to regulate gambling after the 2018 US Supreme Court case Murphy v. National Collegiate Athletic Association, whichstruck down the Professional and Amateur Sports Protection Act of 1992 (PASPA).[9]In that 6-3 decision, the court ruled that PASPA unconstitutionally commandeered state legislative power by forcing states to keep sports betting bans in place. In addition, the Ninth Circuit’s decision did not specifically address whether Kalshi’s event contracts meet the definition of a swap under prong (iv) of the swap definition under the CEA, which includes “an agreement, contract, or transaction that is, or in the future becomes, commonly known to the trade as a swap[.]”[10] Reliance on CFTC Rule 40.11 The court also relied on CFTC Rule 40.11, which states that a registered entity shall not list contracts involving, relating to, or referencing gaming. Because Kalshi offers contracts on game outcomes, point spreads, player performance, and parlays, the court concluded that the products relate to gaming “under any reasonable interpretation.”[11] Judge Kenneth Kiyul Lee noted in his concurring opinion that the CEA provides that the CFTC may determine that gaming contracts are contrary to the public interest, potentially suggesting that Congress did not categorically exclude every gaming-related contract. That provision, he wrote, “gives me pause” and could mean that “some unique sports events can be part of a swap trade.”[12] But Judge Lee noted the court did not need to resolve the issue because Rule 40.11 currently remains in effect and “bars gaming contracts,” irrespective of whether the CEA itself categorically prohibits them.[13] A Supreme Court Fight Is Now a Real Possibility Following the Third Circuit’s ruling, the Ninth Circuit’s ruling creates a direct circuit split over whether sports event contracts are swaps and whether state gaming laws are preempted. Given the conflict and broader implications for prediction-market regulation, Supreme Court review is now substantially more plausible. New Jersey has until September 3, 2026, to petition the Supreme Court for review of the Third Circuit’s ruling, now with a newly minted circuit split to feature in its petition. It is important to note that both decisions arise from preliminary-injunction proceedings, not final merits judgments. Thus, the Supreme Court may resolve the split now or wait for a more procedurally developed case. [1] The terminology “likely not” reflects the preliminary-injunction posture of the case. At this stage, the Ninth Circuit considered whether Kalshi had demonstrated a likelihood of success on the merits, rather than finally deciding whether the contracts qualify as swaps under the CEA. [2] KalshiEX, LLC v. Assad, 2026 U.S. App. LEXIS 26395, at *31 (9th Cir. Aug. 28, 2026) (quoting Epic Systems Corp. v. Lewis, 584 U.S. 497, 523 (U.S. 2018)). [3] Assad, 2026 U.S. App. LEXIS 26395, at *34–35. [4] Id. [5] Id. at *41 (quoting United States v. Lopez, 514 U.S. 549, 565 (U.S. 1995)). [6] See Assad, 2026 U.S. App. LEXIS 26395, at *39 (quoting Kalshiex, LLC v. Flaherty, 172 F.4th 220, 228 (U.S. 2026)). [7] Assad, 2026 U.S. App. LEXIS 26395, at *36. [8] Id. at *52. [9] 138 U.S. 1461 (2018). [10] 7 U.S.C. § 1a(47)(A)(iv). [11] Id. at *47. [12] Id. at *63. [13] Id. at *64.

The 9th U.S. Circuit Court of Appeals on Friday told Kalshi it had to stay out of Nevada, providing a victory for the state's gaming regulators. In aunanimous rulingissued by a three-judge panel, the court determined that U.S. District Judge Andrew Gordon did not abuse his discretion when he changed his opinion and allowed the Nevada Gaming Control Board to ban the unlicensed prediction market from offering sports betting contracts in the state. In its decision, the court rejected Kalshi's argument that it was impossible to comply with Nevada law and the Commodity Exchange Act (CEA) simultaneously and that Nevada law posed an obstacle to the CEA's purposes. "Because we disagree with Kalshi's overly broad reading of the CEA, and because (Commodity Futures Trading Commission) CFTC regulations currently prohibit offering contracts related to gaming on prediction markets, we affirm the district court's order dissolving the injunction as to sports event contracts," Judge Ryan Nelson wrote. Kalshi and other prediction markets have been banned by gaming regulators and courts in several states, saying a 2018 decision by the U.S. Supreme Court gave states the right to regulate sports betting. Industry analysts believe the Supreme Court will ultimately decide the issues surrounding prediction markets. Control Board Chairman Mike Dreitzer said the court's ruling "vindicates" that sports betting "needs to be properly regulated by the state," which Nevada has been doing "for more than 70 years. We will continue to vigorously enforce Nevada law to safeguard gaming in our state." Gov. Joe Lombardo (R) said in a statement released by the control board that, "Prediction markets offering sports-event contracts constitute gambling and must comply with Nevada's gaming laws and regulatory framework." In a statement, Kalshi spokeswoman Dani Lever said the 9th Circuit judges did agree with an April opinion from the 3rd Circuit that "federal law prevents states from regulating trading on a federally licensed exchange, like Kalshi." Lever added, "Despite the 9th Circuit's opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review." The ruling was applauded by gaming industry leaders. In a statement, American Gaming Association CEO Bill Miller said the decision was "a significant win for consumer protections and taxpayers. It is a big loss for Kalshi and other backdoor sports gambling operations who defy state laws." Nelson added that "in dissolving the preliminary injunction, (Gordon) did not abuse (his) discretion in analyzing whether Kalshi showed that it was likely to suffer irreparable harm and that an injunction was both equitable and in the public interest." The panel affirmed part of the court order that allowed gaming regulators to enforce state laws against Kalshi's sports-related event contracts. The panel sent the case back to the district court to consider Nevada's challenges to Kalshi's election contracts so they are consistent with the opinion. The decision comes more than five monthsafter the judges heardnearly two hours of oral arguments in San Francisco by attorneys involved in the control board's lawsuits against Kalshi and prediction market operators Crypto.com and Robinhood Derivatives. Washington, D.C., attorney Nicole Saharsky, who represented Nevada gaming regulators, said at the hearing the cases constitute "a severe intrusion on state sovereignty. Their position is that all sports bets would qualify as swaps. That would make the (Commodity Futures Trading Commission) CFTC the nation's gaming regulator." Saharsky said the challenges to state gaming laws would effectively nullify the 2018 U.S. Supreme Court ruling that allowed individual states to legalize sports betting. During the April hearing, the judges appeared skeptical of arguments by attorneys for Kalshi and two other prediction markets that Nevada gaming regulators are unfairly keeping the businesses out of the state. "Explain to me the difference between a sports bet that happens in Caesars and a sports bet with [a prediction market]?" Nelson asked an attorney for Crypto.com. "The waters have been muddied, but that happens all the time." Judge Kenneth Lee, writing in a concurrent opinion, suggested a statutory provision "appears to give the CFTC discretion" on banning gaming contracts. But the statute does not seem to categorically bar all gaming contracts. "However, this question of statutory interpretation need not be resolved now because (the Code of Federal Regulations) currently bars gaming contracts," Lee wrote. Updated at 1:53 p.m. on 8/28/2026 to include statements from the Gaming Control Board, Gov. Joe Lombardo and Kalshi. You’ve enjoyedunlimitedaccess to our reporting because we’re committed to providing independent, accessible journalism for all Nevadans. But sustaining this work — informing communities, holding leaders accountable, and strengthening civic life — depends on readers like you. Nevada needs strong, independent journalism. Will you join us? A gift of any amount helps keep our reporting free and accessible to everyone across our state and funds our elections coverage. Choose an amount orlearn more about membership

Supported by Prediction Markets Should Be Regulated as Gambling, Appeals Court Says The outcome contradicted an earlier appeals court decision. Federal regulators said the split rulings called for resolution by the Supreme Court. A federal appeals court ruled on Friday that states had the ability to regulate prediction markets, a win for the states in an ongoing battle with federal regulators over who had authority over popular wagering platforms. The U.S. Court of Appeals for the Ninth Circuit in San Francisco rejected Kalshi’s request for relief against Nevada’s gambling laws, after the state sued the company in February for “unlicensed operations.” Prediction markets, notably Kalshi, have exploded in popularity this year and attracted billions of dollars in trades on topics as varied as elections, sports and reality television. But their surge of success has prompted state pushback. Now, 20 states are locked in litigation over whether the prediction markets are subject to their gambling laws. The nationwide legal battle boils down to a debate over whether prediction markets offer swaps, a type of financial contract that is regulated only at the federal level. Judge Ryan Nelson wrote in the opinion issued on Friday that Kalshi’s “sports event contracts were not ‘swaps’ because they were sports bets,” and should be subject to state gambling laws, as a previous federal court had determined. In July, Kalshi had agreed to restrict users in Nevada from wagering on sports, elections and entertainment. But the ruling contradicted a decision by Philadelphia’s Third Circuit in April that said Kalshi’s sports event contracts were swaps under the Commodity Exchange Act, which granted them federal pre-emption from state laws. “The Ninth Circuit has now teed up a circuit split that calls out for resolution by the Supreme Court,” said Zach Fulton, a spokesman for the Commodity Futures Trading Commission, or C.F.T.C., the federal agency that oversees the industry. Mr. Fulton added that the court “erred today” and accused it of inventing a new exception to the Commodity Exchange Act. Aaron Ford, Nevada’s attorney general, said in a statement that his office was “proud to have defended Nevada’s authority,” adding that “the Ninth Circuit rejected that argument and made clear what we have maintained from the beginning: Sports betting does not become something else simply because a company calls it an ‘event contract.’” A spokeswoman for Kalshi, Dani Lever, said the company believed that C.F.T.C. regulations did not prohibit sports contracts, despite the court’s opinion. “We will be seeking further review,” she said. Last month, 44 states signed a letter in disagreement, arguing that “sports bets are not swaps, futures or other derivatives, so the C.F.T.C. lacks statutory authority to regulate them.” The issue of federal versus state control of prediction markets is also pending in the Second, Fourth, Sixth and Seventh Circuit Courts of Appeals. An earlier version of this article misstated the number of states involved in litigation over whether prediction markets were subject to their gambling laws. It is 20 states, not more than 20. We acknowledge mistakes in our reporting with corrections. If you spot an error, please let us know at [email protected] more. Lauren McCarthy is a business reporter for The Times. Related Content Advertisement