The U.S. Court of Appeals for the Ninth Circuit has unanimously ruled against prediction market operator Kalshi, allowing Nevada gaming regulators to enforce state gambling rules against the company's sports event contracts. The three-judge panel found that Kalshi failed to show the Commodity Exchange Act likely preempts Nevada's gaming laws, reversing a lower court's preliminary injunction.
Circuit Judge Ryan Nelson wrote that Kalshi's sports contracts carry the hallmarks of sports betting and likely do not qualify as swaps under federal commodities law. He said the Commodity Futures Trading Commission is not a national gambling regulator and that no one suggested otherwise until more than a decade after Dodd-Frank. The panel concluded that contracts based on whether a sporting event occurs differ from those based on an event's result, and Kalshi's products are tied to outcomes.
The ruling upheld U.S. District Judge Andrew Gordon's November 2025 decision to dissolve an earlier injunction. Nevada's Gaming Control Board had sent Kalshi a cease-and-desist letter after determining the company was operating a sports betting platform without required state licenses. Kalshi initially won a preliminary injunction in April 2025, but later rulings in similar cases prompted Nevada to ask the district court to reconsider.
The Ninth Circuit rejected Kalshi's three preemption arguments. It found 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. The panel also noted that Kalshi's self-certification and listing of sports contracts did not establish federal protection from state law.
The decision creates a circuit split. In April, the Third Circuit ruled that New Jersey could not apply its gaming laws to Kalshi's federally regulated platform. Legal analyst Daniel Wallach said Kalshi could seek a rehearing before the full Ninth Circuit or petition the Supreme Court, and he expected the company to consider the Supreme Court route. Other appellate cases remain pending in the Fourth and Second Circuits. State and federal courts have produced mixed preliminary results, with judges in Tennessee and Arizona granting Kalshi protection, while courts in Ohio, New York, and Nevada have declined.
Nevada's challenge to Kalshi's election contracts will return to the district court, and the appeals panel directed Judge Gordon to examine them under the reasoning set out in Friday's opinion. The decision directly applies within the Ninth Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.
