Kalshi’s sports-event contracts are facing a widening state-by-state legal squeeze. On August 28, 2026, the 9th U.S. Circuit Court of Appeals let Nevada enforce its gaming laws against Kalshi’s sports markets. Four days later, a Michigan state judge ordered Kalshi to keep those markets blocked for people located in Michigan, with violations carrying a $500,000 daily penalty.
What did the 9th Circuit decide in KalshiEX v. Assad?
The 9th Circuit affirmed the dissolution of Kalshi’s preliminary injunction against Nevada officials in KalshiEX, LLC v. Assad, No. 25-7516, clearing the way for the Nevada Gaming Control Board to enforce state gaming law against Kalshi’s sports-event contracts. The panel consisted of Judges Ryan D. Nelson, Bridget S. Bade, and Kenneth Kiyul Lee.
Judge Nelson, writing for the court, rejected Kalshi’s argument that the Commodity Exchange Act preempts Nevada’s sports-betting rules. The opinion said Kalshi’s position depended on an “overly broad reading” of the federal statute and described the company’s refusal to characterize sports-event contracts as sports bets as “disingenuous.”
Kalshi argued that it could not comply with both Nevada law and the CEA, and that Nevada’s rules interfered with the federal commodities framework administered by the Commodity Futures Trading Commission. The panel rejected both theories at the preliminary-injunction stage. Judge Lee also wrote separately, noting that the CFTC currently bars gaming contracts, which narrowed the preemption issue before the court.
The ruling did not decide whether a future CFTC rule explicitly authorizing sports-event contracts would preempt state gambling laws. That distinction matters because Kalshi’s broader strategy has been to frame federally regulated event contracts as outside state gaming regimes. The 9th Circuit’s decision gives Nevada immediate room to enforce its licensing laws, but it does not end the national preemption fight.
Did the 9th Circuit ruling apply only to Kalshi?
No. The 9th Circuit decided related Nevada sports-contract cases the same day involving North American Derivatives Exchange and Robinhood Derivatives. In North American Derivatives Exchange, Inc. v. Nevada, No. 25-7187, and Robinhood Derivatives, LLC v. Dreitzer, No. 25-7831, the court applied the same core reasoning to sports contracts offered through those platforms.
The court treated election contracts separately. It remanded those issues to U.S. District Judge Andrew Gordon for further proceedings and did not extend the sports-contract ruling to political prediction markets. That split keeps the immediate decision focused on sports, where state regulators have argued that event contracts function like wagers covered by existing sports-betting statutes.
Nevada Attorney General Aaron Ford characterized the ruling as a win for state authority over sports betting. Kalshi spokesperson Dani Lever said the company “still believes the CFTC regulations as written do not prohibit sports contracts” and said Kalshi would seek further review.
What does Michigan’s injunction require Kalshi to do?
In Michigan, Ingham County Circuit Court Judge Rosemarie E. Aquilina signed a preliminary injunction on September 1, 2026, requiring Kalshi to maintain geofencing that blocks sports-related event contracts for people located in Michigan. The order followed a March 2026 lawsuit by Michigan Attorney General Dana Nessel under the state’s Lawful Sports Betting Act.
The injunction bars Kalshi from offering, listing, executing, or settling sports-related event contracts accessible in Michigan. The covered markets include moneyline contracts, parlays, over-under contracts, in-game betting, proposition bets, and products that are functionally equivalent to betting on sports.
The order also requires Kalshi to use a third-party geolocation provider licensed by the Michigan Gaming Control Board and capable of meeting the board’s technical standards. Kalshi must serve the order on futures commission merchants within three business days. The penalty for noncompliance is $500,000 per day, up from the $120,000 daily penalty attached to the earlier temporary restraining order.
Kalshi had sought to move the Michigan case to federal court, but the Western District of Michigan granted the state’s motion to remand, returning the proceeding to state court. Nessel said in a September 2 statement that the order protects Michigan residents from what her office called “predatory, unlicensed practices.”
Which states have court orders or active proceedings over Kalshi sports contracts?
Nevada and Michigan are not the only states where Kalshi’s sports contracts have reached court. Massachusetts secured a preliminary injunction on January 20, 2026, blocking Kalshi from offering sports wagers in the state, according to a Massachusetts Attorney General’s Office release.
Tennessee has also been in federal temporary-restraining-order and preliminary-injunction proceedings in KalshiEX LLC v. Orgel. Minnesota has had federal preliminary-injunction litigation involving the CFTC, Kalshi, and Polymarket, including a July 27, 2026 order. Those proceedings do not all put Kalshi in the same posture as Michigan’s state-court injunction, but they show that the sports-contract fight has moved well beyond warning letters and administrative objections.
Arizona has taken a separate enforcement route. State authorities filed 20 criminal misdemeanor charges against Kalshi tied to sports-event contracts, creating a different form of legal exposure from civil injunction litigation. New York has also raised regulatory objections, while state officials across multiple jurisdictions have argued that sports-event contracts are regulated wagers when offered to people inside their borders.
Is Kalshi’s federal preemption argument still alive?
Yes, but the 9th Circuit decision is a major setback for Kalshi’s current version of the argument. The company’s position is that CFTC-regulated event contracts fall under federal commodities law and cannot be displaced by state gambling regulators. Nevada persuaded the 9th Circuit that this theory did not justify an injunction blocking state enforcement of sports-betting rules.
The decision’s limits are also important. The 9th Circuit leaned partly on the CFTC’s current treatment of gaming contracts, rather than resolving every possible version of the federal-state conflict. If the CFTC later changes its rules or expressly authorizes sports-event contracts, Kalshi and other exchanges could test a different preemption theory in future litigation.
For the immediate case, Kalshi’s next procedural option is further review in the 9th Circuit. Under Federal Rule of Appellate Procedure 40, a petition for panel rehearing is generally due within 14 days after entry of judgment unless a longer deadline applies because the United States, a federal agency, or a federal officer is a party. The CFTC participated as an amicus in KalshiEX v. Assad, not as a party, making September 11, 2026 the ordinary 14-day deadline absent an extension or court order.
Why does this matter for prediction markets?
The state cases are testing whether federally registered event-contract exchanges can build sports markets without obtaining state sports-betting licenses. That question matters not just for Kalshi, but for any CFTC-regulated exchange or brokerage trying to offer sports-linked contracts nationwide.
The 9th Circuit decision gives state gaming regulators a strong citation for the argument that sports-event contracts can be treated as sports betting under state law. Michigan’s injunction adds a separate pressure point by attaching a specific daily penalty to geofencing failures. Massachusetts already has a preliminary injunction in place, while Arizona’s misdemeanor case shows that state enforcement can also move through criminal channels.
The next near-term date is September 11, 2026, the ordinary deadline for Kalshi to seek rehearing of the 9th Circuit ruling. After that, the industry’s attention turns to whether Kalshi pursues Supreme Court review, how Michigan’s state-court case proceeds on the merits, and whether the CFTC changes its own treatment of sports-event contracts.
