CoinDesk
A unanimous Ninth Circuit panel ruled Friday that Nevada's gaming regulations likely apply to Kalshi's sports event contracts, rejecting the company's claim that the Commodity Futures Trading Commission should have exclusive authority. The panel said the Commodity Exchange Act likely does not preempt Nevada law and that the contracts were sports bets, not swaps. It is the second major federal ruling on Kalshi's state fights, contrasting with an April decision involving New Jersey.
Why it matters
Prediction markets sit between derivatives law and state gambling rules. Kalshi says federal oversight under the Commodity Exchange Act prevents states from regulating trading on a federally licensed exchange. The Ninth Circuit rejected that position as applied to Nevada's sports contracts, while the April New Jersey ruling reached the opposite result.
That conflict has become a federal jurisdiction question. CFTC spokesman Zach Fulton said the decision created a circuit split that calls for Supreme Court review. Nevada Gaming Control Board Chairman Mike Dreitzer said the ruling confirmed that Kalshi's activity is sports betting subject to state regulation.
Market impact
Kalshi has already pulled out of Nevada and other jurisdictions after local orders. It will seek further review; Connecticut filed another lawsuit earlier this week, and the CFTC is pursuing cases to establish sole jurisdiction over Kalshi and similar businesses.
The broader industry now faces uncertainty over whether sports event contracts are swaps or bets and which regulator has final authority. The ruling also referenced event-contract activity involving Robinhood and Crypto.com. The American Gaming Association called it a win for consumer protections and taxpayers.
Frequently asked questions
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How does the Commodity Exchange Act figure in Kalshi's case?
Kalshi argues that federal oversight under the Commodity Exchange Act prevents states from regulating trading on a federally licensed exchange. The Ninth Circuit said the law likely does not preempt Nevada's gaming rules as applied to the sports contracts.
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Why are the federal rulings on Kalshi pointing in different directions?
An April federal ruling involving New Jersey reached the opposite result from the Ninth Circuit's Nevada decision. CFTC spokesman Zach Fulton said the conflict created a circuit split that calls for Supreme Court review.
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What is Kalshi planning after the Ninth Circuit ruling?
Kalshi said it will seek further review. The company maintains that CFTC rules, as written, do not prohibit sports contracts.
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Has Kalshi stopped operating in Nevada?
Kalshi had already pulled out of Nevada and other jurisdictions in response to local orders. Nevada regulators continued to characterize the activity as illegal wagering under state law.
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How could the decision affect other event-contract platforms?
The ruling leaves Kalshi and similar businesses facing uncertainty over state enforcement and federal authority while lawsuits continue. It also referenced event-contract activity involving Robinhood and Crypto.com.
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