A three-judge federal appeals panel has rejected Kalshi’s attempt to block Nevada gaming regulators from enforcing state laws against its sports event contracts.
Summary
- The Ninth Circuit found that Kalshi’s sports contracts are likely bets rather than swaps.
- The 3-0 ruling allows Nevada to enforce its gaming laws while litigation continues.
- The decision conflicts with an April ruling involving New Jersey and Kalshi.
- Nevada’s challenge to Kalshi’s election contracts will return to the district court.
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.
Kalshi sports contracts fall outside swap rules
Writing for the unanimous panel, Circuit Judge Ryan Nelson said the federal commodities law gives the Commodity Futures Trading Commission exclusive authority over swaps traded or executed on a designated contract market.
Kalshi operates a CFTC-regulated designated contract market, and the parties did not dispute that its sports contracts were traded through that venue. The court, however, found that the products likely do not qualify as swaps under the Commodity Exchange Act because they function as sports bets.
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.
“The CFTC is not a national gambling regulator,” Nelson wrote. “No one suggested it was until over a decade after the law was passed.”
According to the opinion, Kalshi’s contracts carry the “hallmarks of sports betting,” which the court described as a traditional form of gambling. The panel also referred to Kalshi’s marketing of its service as an app for legal sports betting across all 50 states.
Accepting Kalshi’s interpretation would place nearly all sports wagering under the CFTC’s control, the court reasoned, even though states have long supervised gambling. Nelson said such a reading would also raise concerns under the major questions doctrine because Congress did not clearly assign nationwide gambling regulation to the CFTC through the Dodd-Frank Act.
The court further found that Kalshi’s self-certification and listing of the sports contracts did not establish federal protection from state law. 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.
Nevada can enforce its gaming laws
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.
Nevada’s regulator had sent Kalshi a cease-and-desist letter after concluding that the company was operating a sports betting platform without the licenses required under state law. Kalshi sought federal protection, arguing that CFTC oversight displaced Nevada’s authority.
Initially, the district court granted Kalshi a preliminary injunction in April 2025. Later court decisions involving similar products reached different results, prompting Nevada to ask Gordon to reconsider the order.
After denying a related request from Crypto.com, Gordon dissolved Kalshi’s injunction. He found that sports contracts tied to the result of a game did not meet the Commodity Exchange Act’s definition of a swap.
On appeal, the Ninth Circuit rejected Kalshi’s three preemption arguments. The panel found that express preemption did not apply because the contracts were not swaps, while compliance with both federal and Nevada law was not impossible. Judges also rejected the claim that federal commodities law occupied the entire regulatory field.
The court upheld Gordon’s assessment of the remaining injunction requirements, including irreparable harm, the balance of equities and the public interest. Since Kalshi had not shown that it was likely to win its preemption claim, the panel found no abuse of discretion in allowing Nevada to enforce its laws.
Nevada Gaming Control Board attorney Nicole Saharsky said the decision confirmed that states regulate sports betting. Arizona Attorney General Kris Mayes also welcomed the ruling, saying that calling a sports bet a swap does not change the product’s nature.
The decision directly applies within the Ninth Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. Kalshi is already involved in separate proceedings within the circuit, including an Arizona appeal filed after a district judge blocked enforcement of that state’s gambling laws.
In July, a Washington state judge also blocked Kalshi sports contracts after finding that state officials were likely to succeed on claims that the platform offered illegal gambling products.
Appeals courts have split over Kalshi
The Nevada result conflicts with an April 6 ruling from the Third Circuit, where a divided panel found that New Jersey could not apply its gaming laws to Kalshi’s federally regulated platform.
A circuit split can increase the chance of U.S. Supreme Court review, though the justices are not required to take the case. Legal analyst Daniel Wallach said Kalshi could request a rehearing before the full Ninth Circuit or petition the Supreme Court directly.
Wallach said he expected the company to consider the Supreme Court route because it lost before a panel made up entirely of judges appointed by President Donald Trump. Kalshi and the CFTC did not immediately comment on the decision, according to Reuters.
Other appellate cases remain pending. The Fourth Circuit is reviewing a Maryland decision that denied Kalshi an injunction, while the Second Circuit is considering litigation involving Connecticut.
State and federal courts have produced mixed preliminary results. Judges in Tennessee and Arizona have granted Kalshi protection from state enforcement, while courts in Ohio, New York, and Nevada have declined to do so.
As crypto.news previously reported, the platforms have become involved in an expanding state-level legal fight involving injunctions, cease-and-desist orders, and lawsuits across the country. Kalshi maintains that its federal registration gives the CFTC exclusive authority over its event contracts, while state regulators say sports markets require local gaming licenses and consumer safeguards.
Connecticut added another case on Aug. 26 by suing over sports contracts. State officials asked a court to stop Kalshi from offering the products and said the company lacked the licenses required of sportsbook operators.
Connecticut’s Department of Consumer Protection had ordered Kalshi, Robinhood and Crypto.com to stop offering or promoting sports event contracts in December 2025. Regulators cited concerns involving the state’s betting age, insider wagering protections and technical standards for licensed operators.
Election contracts return to the Nevada court
While affirming the order covering sports markets, the Ninth Circuit sent Nevada’s challenge to Kalshi’s election contracts back to the district court.
Gordon’s original injunction did not resolve the election products. The appeals panel directed him to examine them under the legal reasoning set out in Friday’s opinion.
Wallach said the remand could place election markets under added review because Nevada law also prohibits wagering on election results. Kalshi offers contracts tied to politics alongside markets involving sports, economic data, weather, and entertainment.
Congress has separately examined the role of sports contracts on federally regulated exchanges. In July, the House Agriculture Committee scheduled a prediction-market hearing focused on customer safeguards and market integrity as gaming groups called for restrictions on sports-based products.
Former SEC Chair Gary Gensler has also argued that Congress did not place sports wagers within Dodd-Frank’s definition of a swap. In a filing connected to Kalshi’s Ohio litigation, Gensler wrote that “Congress did not include sports betting contracts” in the statutory swap definition.
