The 9th U.S. Circuit Court of Appeals ruled on August 28, 2026, that Nevada may enforce its gambling laws against Kalshi’s sports event contracts while the case continues. The preliminary-injunction decision conflicts with the 3rd Circuit’s April 6 ruling in Kalshi’s New Jersey case, giving the Supreme Court a live split over whether federal commodities law blocks state sports-betting regulation.
What did the Ninth Circuit decide about Kalshi in Nevada?
The Ninth Circuit affirmed in part a Nevada federal district court order dissolving Kalshi’s preliminary injunction against the Nevada Gaming Control Board and related state officials. In KalshiEX LLC v. Assad, No. 25-7516, the panel held that Kalshi had not shown a likelihood that the Commodity Exchange Act preempts Nevada gaming regulations as applied to sports-related event contracts.
That procedural posture matters. The court did not enter final judgment on every claim in the case. It reviewed whether Kalshi was entitled to keep Nevada from enforcing state law while litigation proceeded. On sports contracts, the panel said the district court did not abuse its discretion in lifting that protection.
The opinion rejected Kalshi’s central preemption argument at this stage. Kalshi says it operates a Commodity Futures Trading Commission-designated contract market, and that its sports event contracts fall within the CFTC’s exclusive jurisdiction under the Commodity Exchange Act. The Ninth Circuit disagreed for preliminary-injunction purposes, concluding that the sports contracts before it were likely not swaps under 7 U.S.C. § 1a(47)(A)(ii) because they functioned as sports bets.
The panel also pointed to the CFTC’s event-contract rule, 17 C.F.R. § 40.11, which bars a registered entity from listing contracts that involve, relate to, or reference gaming. Judge Ryan D. Nelson wrote for the court that Kalshi’s reading of the statute was too broad and that the Commodity Exchange Act did not show congressional intent to displace state gambling laws in the way Kalshi claimed.
The court remanded the case for the district court to address Nevada’s challenges to Kalshi’s election contracts. The August 28 decision therefore gives Nevada a clear win on sports event contracts, but it leaves election-contract issues for further proceedings.
Why does the ruling create a circuit split?
The split comes from the Third Circuit’s April 6, 2026 decision in KalshiEX LLC v. Flaherty, No. 25-1922. There, the appeals court affirmed a preliminary injunction blocking New Jersey from enforcing state gambling law against Kalshi’s sports-related event contracts.
The Third Circuit held that Kalshi had shown a reasonable chance of success on its argument that the Commodity Exchange Act preempts state law as applied to sports-related event contracts traded on a CFTC-licensed designated contract market. The court found both field preemption and conflict preemption, reasoning that New Jersey’s enforcement would interfere with Congress’s federal framework for CFTC-regulated markets.
The Ninth Circuit reached the opposite result on the threshold statutory question and on preemption. Its panel said Kalshi had not shown a likelihood of success because the sports contracts were likely not swaps under the Commodity Exchange Act and because Nevada’s enforcement did not create an impossible conflict with federal law.
Two federal appeals courts have now answered the same industry question differently at the preliminary-injunction stage: whether a CFTC-registered prediction-market exchange can use federal commodities law to block state gambling regulators from reaching sports event contracts. That conflict is the reason the Nevada decision immediately sharpened attention on Supreme Court review.
What is the Supreme Court timing?
The immediate date is September 3, 2026, New Jersey’s deadline to petition the Supreme Court for review of the Third Circuit decision. The Ninth Circuit ruling arrived less than a week before that deadline and gives New Jersey a stronger argument that the Court should resolve a disagreement among federal appeals courts.
If New Jersey files, the petition would ask the justices to review the Third Circuit’s decision in the New Jersey case, not the Ninth Circuit’s Nevada opinion directly. Kalshi could also seek further review of the Ninth Circuit ruling through rehearing or Supreme Court review, but the next concrete deadline on the calendar is New Jersey’s September 3 certiorari deadline.
The Supreme Court is not required to take the case. The split, however, gives the dispute a clearer vehicle than a single state enforcement fight would have offered. For prediction-market operators, state regulators, sportsbooks and the CFTC, the question is no longer only whether Kalshi wins in one jurisdiction. It is whether federal commodities regulation gives a nationwide answer to products that states view as sports betting.
Where do Nevada and other states stand?
Nevada’s case began after the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter alleging that the company was operating a sports betting platform in violation of Nevada statutes and gaming regulations. The Ninth Circuit described that letter and the injunction dispute in its August 28 opinion.
The Associated Press reported that the Nevada attorney general’s office welcomed the ruling as a win for state authority over sports wagering. The American Gaming Association also supported Nevada’s position in the case, appearing as an amicus in the Ninth Circuit proceeding.
Other states have pursued similar theories. Connecticut Attorney General William Tong, the Department of Consumer Protection and Governor Ned Lamont announced on August 26, 2026, that Connecticut had sued Kalshi and sought an injunction to stop what the state called unlicensed sports betting. The Connecticut attorney general’s office said the Department of Consumer Protection Gaming Division had ordered Kalshi and two other platforms in December 2025 to cease and desist offering sports event contracts or other unlicensed online gambling to Connecticut residents.
Kentucky Attorney General Russell Coleman announced on June 17, 2026, that his office had filed lawsuits in Franklin Circuit Court against Kalshi, Polymarket and VGW, accusing them of operating unlicensed gambling or sports-betting platforms in Kentucky. New Mexico Attorney General Raúl Torrez announced on June 4, 2026, that the New Mexico Department of Justice had sued Kalshi, Inc. and KalshiEX LLC, alleging that Kalshi was unlawfully offering online sports betting in the state without complying with New Mexico gaming law.
Those state actions do not all sit in the same procedural posture, and their claims vary by state law. Together, they show why the Nevada and New Jersey appeals are being watched beyond their own borders.
What is the CFTC’s position?
The CFTC has taken the position in related litigation that it has exclusive jurisdiction over designated contract markets under the Commodity Exchange Act. The Arizona federal court docket in KalshiEX LLC v. Johnson described a CFTC amicus brief in a case consolidated with Assad as arguing that the agency retains exclusive jurisdiction to regulate DCMs.
That position now faces a direct appellate setback in the Ninth Circuit. The panel did not treat Kalshi’s self-certification of sports contracts as enough to establish that those contracts were lawful or insulated from state gambling enforcement. It also read the CFTC’s own gaming-contract regulation as a barrier for Kalshi’s sports products.
The agency backdrop is broader than Kalshi. CFTC records list KalshiEX LLC as a designated contract market, and CFTC industry filings list QCX LLC doing business as Polymarket US as a designated contract market as of July 9, 2025. That means the legal question is not limited to whether one company can operate in Nevada. It reaches how far federal DCM status can carry any prediction-market operator when state regulators classify a sports product as gambling.
Why does the sports-contract fight matter?
The sports-contract fight sits at the intersection of two regulatory systems. The Commodity Exchange Act gives the CFTC authority over derivatives markets, including designated contract markets. State gambling laws, by contrast, govern sports wagering licenses, consumer protections, age limits and enforcement inside state borders.
The Supreme Court’s May 14, 2018 decision in Murphy v. NCAA struck down the federal Professional and Amateur Sports Protection Act restriction that had barred states from authorizing sports betting. After Murphy, states built their own sports-wagering regimes. Kalshi’s argument would place federally listed sports event contracts outside those state frameworks when traded on a CFTC-regulated exchange.
That is why casino and sportsbook interests have aligned with state regulators, while prediction-market operators frame the dispute as one about federal market structure. The Ninth Circuit’s ruling gives states a major appellate precedent for treating sports event contracts as sports betting. The Third Circuit’s ruling gives Kalshi the opposite precedent in New Jersey, Pennsylvania, Delaware and the U.S. Virgin Islands.
The next milestone is New Jersey’s September 3, 2026 Supreme Court filing deadline. Until the Supreme Court acts, or Congress or the CFTC changes the governing framework, Kalshi faces different appellate rules in different parts of the country on the same sports-contract preemption question.
