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Nevada wins, Kalshi loses
A federal appeals court on Friday rejected Kalshi’s efforts to stop Nevada from regulating speculation on sporting events on its platform, ruling that Nevada can ban the prediction market company from operating in the state.
“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”
The 9th U.S. Circuit Court of Appeals said Kalshi failed to show that the 1936 Commodity Exchange Act preempts Nevada gambling laws, and it held that Kalshi’s sports event contracts are not federally regulated “swaps” but rather sports bets.
In a 3-0 decision, Judge Ryan Nelson wrote that “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,” and the court allowed Nevada to resume enforcement of its gaming laws against Kalshi’s sports event contracts.
The ruling followed a dispute in which Nevada regulators had sent a cease-and-desist letter to Kalshi in March, arguing Kalshi operated a sports betting platform in the state in violation of Nevada gaming regulations.
Kalshi spokeswoman Dani Lever said the company will seek further review after the decision, while Nevada’s gaming regulators said the ruling “vindicates what we have been saying all along.”
Circuit split sharpens
The Ninth Circuit’s ruling creates a split with a prior April decision from the 3rd U.S. Circuit Court of Appeals, which had concluded that the Commodity Futures Trading Commission has exclusive control over sports-related event contracts on Kalshi.
Zach Fulton, a spokesman for the Commodity Futures Trading Commission, said the Ninth Circuit “erred” and argued the decision “erred today” by inventing a new exception to the Commodity Exchange Act.
Kalshi’s position, as described in the reporting, is that it is a “designated contract market” offering legal sports event contracts, or “swaps,” and that the Commodity Exchange Act preempts Nevada’s gaming regulations as they apply to swaps.
Nevada’s attorney general Aaron Ford said his office was “proud to have defended Nevada’s authority,” and he argued that the Ninth Circuit “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.’”
The New York Times reported that 20 states are locked in litigation over whether prediction markets are subject to their gambling laws, and it said the issue is pending in the Second, Fourth, Sixth and Seventh Circuit Courts of Appeals as well.
What happens next
The Ninth Circuit’s decision upheld a November 2025 ruling by Chief Judge Andrew Gordon in Las Vegas federal court that dissolved an injunction allowing Kalshi to continue offering sports event contracts in Nevada, and it returned the case to consider Nevada’s challenges to Kalshi’s election contracts.
“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.”
Reuters reported that at least four states—Nevada, Massachusetts, Michigan and Washington—have won court orders restricting Kalshi’s activities, and it said New Jersey has until September 3 to appeal the 3rd Circuit decision.
The National Law Review framed the Ninth Circuit’s reasoning around whether Kalshi’s sports contracts are “swaps,” noting that the court concluded they are likely not swaps and that it stressed “The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps.”
The ruling also left open the possibility of Supreme Court review, with CNBC describing the decision as setting up a likely fight at the Supreme Court because it contradicts the 3rd Circuit’s earlier conclusion.
In the meantime, the Nevada Gaming Control Board said the ruling would help “safeguard the integrity of our gaming industry,” while Kalshi said it believes CFTC regulations do not prohibit sports contracts and that it will seek further review.