Meta description: Kalshi CEO Tarek Mansour rejected the Ninth Circuit’s sports-betting label as New Jersey asked the Supreme Court to review a split.

Tags: Kalshi, CFTC, Ninth Circuit, Supreme Court, New Jersey, Nevada, Tarek Mansour

Market platform: Kalshi

Category: Regulation

Kalshi chief executive Tarek Mansour rejected the Ninth Circuit’s description of the exchange’s sports contracts as sports betting in a RotoWire interview published September 3. His comments landed one day after New Jersey asked the U.S. Supreme Court to review conflicting appellate rulings now defining the prediction-market industry’s fight with state gaming regulators.

The timing matters. On August 28, a three-judge Ninth Circuit panel sided with Nevada regulators and held that Kalshi had not shown the Commodity Exchange Act likely preempts state gaming law for its sports event contracts. The Third Circuit reached the opposite result in Kalshi’s New Jersey case, creating a direct appellate conflict over whether sports-linked event contracts belong primarily under federal commodities law or state gambling law.

What did the Ninth Circuit rule against Kalshi?

The U.S. Court of Appeals for the Ninth Circuit ruled on August 28 in KalshiEX LLC v. Assad, No. 25-7516, that Kalshi had not shown a likelihood that the Commodity Exchange Act preempts Nevada’s gaming laws as applied to sports event contracts. The panel affirmed the dissolution of a preliminary injunction that had blocked the Nevada Gaming Control Board from enforcing state law against Kalshi’s sports contracts.

Judge Ryan D. Nelson wrote the opinion for the panel, joined by Judges Bridget S. Bade and Kenneth K. Lee. The opinion opened by noting that KalshiEX “advertises itself as ‘the first app for legal sports betting in all 50 states,'” then said the court disagreed with Kalshi’s reading of the Commodity Exchange Act and with its reliance on exclusive CFTC jurisdiction.

The Ninth Circuit held that Kalshi’s sports contracts were likely not swaps under the CEA and that CFTC Regulation 40.11 currently prohibits certain gaming contracts. Judge Lee wrote separately to say one statutory provision gave him pause, because the CEA’s special rule appears to give the CFTC discretion over whether to ban gaming contracts altogether. He still agreed that Regulation 40.11 “currently bars gaming contracts,” which was enough for the panel’s preliminary-injunction analysis.

The opinion also rejected Kalshi’s conflict-preemption and field-preemption arguments. On conflict preemption, the panel said Kalshi had not shown it was impossible to comply with both Nevada law and the CEA. On field preemption, the court distinguished federal regulation of swaps from Nevada laws aimed at unlicensed gaming activity, including operating a sports pool and accepting wagers on sporting events.

How did Mansour answer the sports-betting label?

Mansour told RotoWire he disagreed with the premise that Kalshi’s use of the word “bet” in some contexts made the exchange a sportsbook. Asked about Judge Nelson’s opening line on Kalshi’s advertising, Mansour answered “No,” then argued that “bet” is often used colloquially in financial markets, including for stocks.

“If you’re using the word ‘bet’ colloquially, you can bet on stocks,” Mansour told RotoWire. He used Tesla and Elon Musk as examples of how ordinary investors may describe a market position in casual conversation, while maintaining that Kalshi’s structure is different from a sportsbook because users trade against one another rather than against the house.

That distinction is Kalshi’s central business and legal argument. Mansour framed the exchange as an open financial market with order books, charts, counterparties and price discovery. The Ninth Circuit framed the relevant legal question differently, focusing on whether sports event contracts fit within the CEA’s swap definition and whether federal law displaced Nevada’s gaming statutes.

The advertising language still creates a litigation problem for Kalshi. The Ninth Circuit cited Kalshi’s own description of itself as a legal sports-betting app, then treated that description as relevant to the nature of the products at issue. Mansour’s response is that market vocabulary can overlap with betting language without making the product state-regulated gambling.

Why does the Third Circuit split matter now?

The Ninth Circuit’s decision conflicts with the Third Circuit’s April 6 ruling in KalshiEX LLC v. Flaherty, No. 25-1922, which affirmed a preliminary injunction blocking New Jersey from enforcing its gambling laws against Kalshi in that case. The Third Circuit held that Kalshi’s sports contracts were swaps and that the CEA gave the CFTC exclusive jurisdiction over transactions on a designated contract market.

That split moved from appellate posture to Supreme Court posture on September 2, when New Jersey filed a certiorari petition asking the justices to review the Third Circuit decision. Reuters reported the filing the same day, and RotoWire noted in its September 3 interview that the petition was filed after Mansour’s conversation with the outlet.

The practical effect remains narrower than saying Kalshi has nationwide protection from state enforcement. The Third Circuit ruling controls the New Jersey injunction and binds federal courts within that circuit unless the Supreme Court says otherwise. The Ninth Circuit ruling controls the Nevada appeal and leaves Kalshi exposed to Nevada enforcement on sports contracts unless another court order changes that position.

For the industry, the legal conflict is substantial. Prediction-market operators including Kalshi, Crypto.com and Robinhood have argued that federally regulated event contracts cannot be displaced by state gaming law. State regulators have argued that sports contracts with yes-or-no payouts on game outcomes are gambling products when offered to residents without a state gaming license.

What role does CFTC Rule 40.11 play?

CFTC Regulation 40.11 is one of the pressure points in both the legal fight and Mansour’s public response. The current rule prohibits a designated contract market from listing or clearing a contract based on an excluded commodity if the contract involves, relates to or references gaming, terrorism, assassination, war, or an activity that is unlawful under state or federal law. A separate part of the rule covers similar activities that the CFTC determines are contrary to the public interest.

The Ninth Circuit treated Rule 40.11 as a reason Kalshi was unlikely to prevail on its sports-contract preemption theory. In the court’s preliminary-injunction analysis, the regulation undercut Kalshi’s argument that the CEA gave it a federal right to offer the sports contracts free from Nevada gaming enforcement.

RotoWire reported Mansour as saying there is “a new rule coming in the next few weeks or next few months” that will clarify Rule 40.11. That is a forward-looking statement from Kalshi’s CEO, not a final agency action. As of the Ninth Circuit’s August 28 opinion, the court applied the regulation as it exists now.

The CFTC’s role is central because Kalshi operates as a designated contract market. Kalshi’s argument depends on the CEA’s federal framework for swaps, futures and event contracts. State regulators’ argument depends on the premise that the federal commodities regime does not silently strip states of their traditional authority over gambling, especially when the products are tied to sporting events.

What did Mansour say about the NFL and NBA?

Mansour also told RotoWire that Kalshi expects more league-related announcements. Asked where things stand with the NFL and NBA, he said readers should “expect announcements very soon, at least by from one of the two remaining major leagues,” according to RotoWire’s published transcript.

He described integrity frameworks and data-sharing agreements as central to Kalshi’s league strategy, saying the structures are designed to help leagues and exchanges catch bad actors. He also said Kalshi wants more data sharing and more market-integrity cooperation with leagues, citing existing collaborations with the NHL and MLB and saying Kalshi had partnered with the U.S. Open during the same week.

Those comments are Kalshi’s account of its own pipeline. RotoWire separately reported Mansour’s remarks, while the court record and league filings remain the firmer sources for the regulatory posture. The NFL has already engaged the CFTC through a letter addressing data sharing and integrity terms, but Mansour did not announce a signed NFL or NBA agreement in the interview.

Mansour also addressed insider trading and manipulation risks in prediction markets. He told RotoWire that market integrity is a core reason Kalshi spent years obtaining federal regulation, and he said bad actors need to be caught and punished. He offered that argument as part of a broader defense of treating prediction markets as regulated financial venues rather than sportsbooks.

What is the next milestone?

The next concrete milestone is the Supreme Court’s handling of New Jersey’s September 2 certiorari petition. If the Court grants review, the justices would take up a question with immediate consequences for Kalshi, state gaming regulators and other firms offering event contracts tied to sports.

The CFTC could also change the legal terrain if it acts on Rule 40.11. Until either the Supreme Court or the CFTC moves, the industry is operating under two appellate rulings that point in opposite directions: the Third Circuit protected Kalshi from New Jersey enforcement in that case, while the Ninth Circuit allowed Nevada’s sports-contract enforcement posture to proceed.