Key Takeaways
- The Ninth Circuit upheld Nevada’s authority to regulate Kalshi’s sports prediction contracts, rejecting the company’s claims of federal preemption
- The panel determined that Kalshi’s offerings constitute sports wagers rather than federally-protected “swaps” under commodities regulations
- This decision directly contradicts an earlier court ruling that prevented New Jersey from asserting regulatory control over Kalshi
- The Commodity Futures Trading Commission maintains it holds sole regulatory authority over prediction markets and contends the court misinterpreted existing statutes
- Both legal analysts and the CFTC believe the Supreme Court will ultimately need to resolve the conflicting interpretations
In a decision that intensifies the regulatory battle surrounding prediction markets, a federal appellate court has sided with Nevada regulators, affirming their authority to oversee Kalshi’s sports-related betting products. The ruling compounds mounting legal challenges confronting the rapidly expanding industry across multiple jurisdictions.
On Friday, the U.S. Court of Appeals for the Ninth Circuit delivered a unanimous decision. All three judges on the panel concluded that Kalshi failed to demonstrate that federal statutes prevent Nevada from enforcing its gaming regulations against the platform’s sports prediction offerings.
Breaking Down the Ruling
According to the court’s analysis, Kalshi’s sports prediction products more closely resemble sports wagers under Nevada’s legal framework rather than “swaps” governed by the federal Commodity Exchange Act. This classification carries significant implications, as swap agreements fall exclusively within the regulatory purview of the Commodity Futures Trading Commission.
The panel wrote: “The CEA likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts.”
Nevada regulators issued Kalshi a cease-and-desist directive in 2025, demanding the platform discontinue offering election and sports prediction contracts to state residents. Kalshi responded by filing suit against Nevada, requesting injunctive relief to continue operations. While a district court initially granted the injunction, it subsequently reversed course and lifted the order. The Ninth Circuit has now affirmed that reversal.
Kalshi has since withdrawn its services from Nevada along with other states that issued comparable regulatory demands.
Competing Judicial Interpretations
This determination stands in stark contrast to an April decision from another federal circuit that blocked New Jersey regulators from asserting control over Kalshi’s operations. These contradictory outcomes establish what legal scholars refer to as a circuit split.
The CFTC criticized the Ninth Circuit’s interpretation as fundamentally flawed. Agency spokesperson Zach Fulton stated the decision “invented a new and atextual exception” to federal commodities legislation. He noted the matter is now “teed up for resolution by the Supreme Court.”
CFTC Chair Michael Selig has repeatedly asserted the agency possesses “exclusive jurisdiction” over prediction market platforms, including those offering sports-related contracts. The commission has initiated its own litigation against multiple states to preserve this authority.
Nevada Gaming Control Board Chairman Mike Dreitzer characterized the ruling as a validation of state oversight. “This is sports betting and needs to be properly regulated by the state,” he declared.
Kalshi disputed the court’s conclusions. Company spokesperson Dani Lever stated the platform maintains its position that federal law permits sports prediction contracts and noted the CFTC is working toward regulatory clarification. Kalshi indicated it would pursue additional legal review.
The American Gaming Association, representing established sportsbook operators, applauded the decision. The organization described it as “a big loss for Kalshi and other backdoor sports gambling operations who defy state laws.”
Connecticut initiated fresh litigation against Kalshi this week, joining an expanding roster of state-level legal challenges. With federal courts arriving at contradictory conclusions, Supreme Court intervention appears increasingly probable.
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