Ninth Circuit hands Nevada the power to enforce gaming law against Kalshi's sports markets
A unanimous panel decided that Kalshi's contracts on who wins a game are likely bets rather than swaps, which turns one federal registration back into a fifty-state licensing problem for the exchange.
The Investor · Invest desk
What happened
- A three-judge Ninth Circuit panel ruled on Aug. 28 that Kalshi had not shown the Commodity Exchange Act likely overrides Nevada's gaming rules for its sports event contracts.
- The panel found the contracts likely are not swaps because they function as sports bets, with the opinion saying they carry the hallmarks of a traditional form of gambling.
- The 3-0 decision affirms Judge Andrew Gordon's November 2025 order dissolving the injunction, leaving the Nevada Gaming Control Board free to enforce its licensing laws while the case proceeds.
- The panel's reading conflicts with an April ruling involving New Jersey and Kalshi over the same kind of product.
Why it matters
- What it limits constraint One federal registration no longer stands in for state licensure where this ruling governs, so each state Kalshi lists outcome contracts in becomes a separate licensing and enforcement cost rather than a rounding error.
- Who's exposed exposure Other state gaming boards now have a unanimous appellate opinion to attach to their own cease-and-desist letters, and it quotes Kalshi's own 50-state betting marketing as evidence.
- Who has to decide decision Money that was funding a preemption argument has to pick between products redesigned onto the occurrence side of the panel's line and buying state licences, and neither route supports exchange-style margins.
- What doesn't add up contradiction Two courts reading the same statute differently means the product's legality is a function of geography, which is a hard thing to underwrite and an expensive thing to litigate to resolution.
Next story · Invest · Oct 9
CFTC carves casino gambling out of its swap definition to claim event contracts for itselfConfirmed6 publishers
The arithmetic Kalshi was selling was one registration instead of fifty. It runs a single CFTC-regulated designated contract market, and nobody disputed that the sports contracts traded there [8], but the venue was marketed, in language the panel quoted back at the company, as an app for legal sports betting across all 50 states [16], a 50-to-1 substitution [23] that only holds if the federal exclusivity over swaps executed on such a market [6] reaches contracts on who wins. The panel said it does not: a market on whether the Super Bowl takes place concerns occurrence, a market on which team wins concerns outcome [2], and outcome contracts function as sports bets [1].
The more interesting holding, or rather the one that matters to anyone underwriting this business, is the second one. Self-certifying and listing the contracts bought no federal protection from state law, because the Commodity Exchange Act's special rule for event contracts and its related regulation let the CFTC itself review and prohibit contracts involving gaming when it finds them contrary to the public interest [9]. So the shield is discretionary in Washington and, in the Ninth Circuit, unavailable in Carson City. Judge Ryan Nelson's line that the CFTC is not a national gambling regulator, and that no one suggested it was until more than a decade after the law passed [15], sits next to a major questions point that no change in agency leadership can fix, since the argument is that Congress never made the delegation at all [19].
The cover was thin from the start. The preliminary injunction was granted in April 2025 and dissolved that November [12][10], about seven months of protection [22], and the appeal then failed on express, conflict and field preemption at once [20], with the panel finding no abuse of discretion on irreparable harm, the equities or the public interest [21].
From here it can go three ways, and they price very differently. Kalshi wins upstairs, helped by the conflict with April's New Jersey ruling [5], and an unlicensed national footprint becomes an asset no licensed book can match. Or it redesigns onto the occurrence side of the panel's line [2], which is a much smaller book. Or it buys state licences one at a time, which makes it a sportsbook priced on hold percentage and marketing spend. This is probably wrong, but my read is that the cash ends up in the third, because a company whose own marketing is now evidence against it [16] has a weak hand at the negotiating table with regulators whose counsel is already treating the question as answered: Nevada's Nicole Saharsky said the decision confirms that states regulate sports betting, and Arizona Attorney General Kris Mayes welcomed it [7]. The counter-thesis, which I would take seriously, is that the split is the asset, since one favourable appellate resolution restores the whole model and costs less than fifty licensing applications. Note what the litigation strategy has been crowding out either way: state compliance headcount, licence filings, and the local partnerships a licensed operator needs before it can take a bet.
Until a court above the Ninth Circuit says otherwise, the wrapper is worth what a state gaming board says it is worth.
What to watch
- Nevada's challenge to Kalshi's election contracts returns to the district court, where Judge Gordon may or may not extend the bet-versus-swap line beyond sports.
- Whether the CFTC opens a public-interest review of sports event contracts under the special rule, which would settle the question faster than any appeal.
- Whether Arizona follows Nevada with enforcement, given Attorney General Kris Mayes's endorsement of the ruling.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence78
- Adoption
- Not scored
- Hype gap+20
- Incentives50
- Confidence74
Perspective Coverage
4 publishers- Builder
- Builder 13%
- Operator
- Operator 56%
- Investor
- Investor 31%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
The court found Kalshi's sports contracts likely do not qualify as swaps under the Commodity Exchange Act because they function as sports bets, and the opinion said they carry the hallmarks of sports betting.
- [2]
Under the panel's reading, a contract based on whether a sporting event occurs differs from one based on the event's result: a market on whether the Super Bowl takes place could involve the occurrence of an event, while a contract asking which team wins concerns its outcome.
- [3]
The U.S. Court of Appeals for the Ninth Circuit ruled on Aug. 28 that Kalshi had not shown the Commodity Exchange Act likely overrides Nevada's gaming rules for sports event contracts.
- [4]
The three-judge panel's ruling was 3-0 and allows Nevada to enforce its gaming laws while litigation continues.
- [5]
The decision conflicts with an April ruling involving New Jersey and Kalshi.
- [6]
Circuit Judge Ryan Nelson, writing for the unanimous panel, said the federal commodities law gives the CFTC exclusive authority over swaps traded or executed on a designated contract market.
- [7]
Nevada Gaming Control Board attorney Nicole Saharsky said the decision confirmed that states regulate sports betting, and Arizona Attorney General Kris Mayes also welcomed the ruling.
- [8]
Kalshi operates a CFTC-regulated designated contract market, and the parties did not dispute that its sports contracts were traded through that venue.
- [9]
The court found Kalshi's self-certification and listing of the sports contracts did not establish federal protection from state law, and that under the Commodity Exchange Act's special rule for event contracts and its related regulation the CFTC may review and prohibit contracts involving gaming or other listed activities when it finds them contrary to the public interest.
- [10]
The ruling affirmed U.S. District Judge Andrew Gordon's November 2025 decision to dissolve an earlier injunction that had prevented the Nevada Gaming Control Board from acting against Kalshi.
- [11]
Nevada's regulator sent Kalshi a cease-and-desist letter after concluding the company was operating a sports betting platform without the licences required under state law.
- [12]
The district court granted Kalshi a preliminary injunction in April 2025, and later court decisions involving similar products reached different results, prompting Nevada to ask Judge Gordon to reconsider.
- [13]
After denying a related request from Crypto.com, Gordon dissolved Kalshi's injunction, finding that sports contracts tied to the result of a game did not meet the Commodity Exchange Act's definition of a swap.
- [14]
Nevada's challenge to Kalshi's election contracts will return to the district court.
- [15]
Nelson wrote: "The CFTC is not a national gambling regulator. No one suggested it was until over a decade after the law was passed."
- [16]
The panel referred to Kalshi's marketing of its service as an app for legal sports betting across all 50 states.
- [17]
With the Ninth Circuit holding the contracts likely are bets and an April ruling involving New Jersey going the other way, the legal status of the same class of contract now depends on jurisdiction until a higher court resolves the conflict.
- [18]
The court reasoned that accepting Kalshi's interpretation would place nearly all sports wagering under the CFTC's control even though states have long supervised gambling.
- [19]
Nelson said Kalshi's reading would raise concerns under the major questions doctrine because Congress did not clearly assign nationwide gambling regulation to the CFTC through the Dodd-Frank Act.
- [20]
The Ninth Circuit rejected all three of Kalshi's preemption arguments: express preemption did not apply because the contracts were not swaps, compliance with both federal and Nevada law was not impossible, and federal commodities law did not occupy the entire regulatory field.
- [21]
The panel upheld Gordon's assessment of irreparable harm, the balance of equities and the public interest, and found no abuse of discretion in allowing Nevada to enforce its laws.
- [22]
Kalshi's Nevada injunction protected it for roughly seven months, from the April 2025 grant to the November 2025 dissolution.
- [23]
Kalshi's model substituted one federal designated contract market registration for the licensing regimes of 50 states, a 50-to-1 ratio.
Sources
4 independent publishers whose own reporting we read for this story.
- apnews.comFederal appeals court panel gives Nevada a win over Kalshi | AP News
1 article · August 28, 2026
- cnbc.comAppeals court rules against prediction markets, tees up SCOTUS fight
1 article · August 28, 2026
- crypto.newsKalshi loses Nevada appeal over sports event contracts
1 article · August 28, 2026
- qz.comNinth Circuit rules states can regulate prediction markets as gambling
1 article · August 28, 2026
Topics and entities
Entities
- Commodity Exchange Act
- Crypto.com
- CFTC
- DraftKings
- Robinhood
- Flutter Entertainment
- Kalshi
- Nevada Gaming Control Board
- Ninth Circuit
- U.S. Court of Appeals for the Third Circuit