The Ninth Circuit ruled on August 28, 2026, that Kalshi had not shown Nevada’s gaming laws are likely preempted by the Commodity Exchange Act as applied to its sports-event contracts. The decision in KalshiEX, LLC v. Assad, No. 25-7516, conflicts with an April Third Circuit ruling favoring Kalshi in New Jersey and raises the odds of Supreme Court review.
What did the Ninth Circuit decide about Kalshi sports contracts?
Judges Ryan D. Nelson, Bridget S. Bade, and Kenneth K. Lee affirmed the dissolution of a preliminary injunction that had blocked Nevada officials from enforcing state gaming laws against Kalshi’s sports-related contracts. In the Ninth Circuit’s published opinion, Judge Nelson wrote that Kalshi had not shown a likelihood that the CEA preempts Nevada’s gaming regulations for those contracts.
The court rejected Kalshi’s central theory that CFTC registration as a designated contract market gives the exchange broad protection from state gaming enforcement. The panel said the CFTC’s exclusive jurisdiction under the CEA covers swaps and futures transactions traded on a designated contract market, but it does not automatically cover every product listed on one.
The opinion also narrowed Kalshi’s proposed reading of the statutory definition of “swap.” The Ninth Circuit said the broadest version of Kalshi’s argument would lack a limiting principle and could sweep ordinary sports wagers into federal derivatives law. The panel concluded that sports-event contracts did not fit the best reading of the CEA’s swap definition in context.
Judge Lee concurred separately. He largely agreed with Judge Nelson’s textual analysis and focused on the CEA’s Special Rule and CFTC Rule 40.11, which address event contracts involving gaming, unlawful activity, terrorism, assassination, and war. His concurrence did not give Kalshi a separate path to preserve the sports-contract injunction.
Which Nevada enforcement actions were at issue?
The Nevada Gaming Control Board sent Kalshi a cease-and-desist letter after the company offered sports-event contracts in the state. The Ninth Circuit opinion said Kalshi advertised itself as “the first app for legal sports betting in all 50 states,” while Kalshi argued in court that it was operating a federally regulated derivatives exchange rather than a state-regulated sportsbook.
Kalshi sued Nevada officials and obtained preliminary relief in district court. That protection was later dissolved, and the Ninth Circuit affirmed the dissolution as to sports-event contracts. The panel remanded the separate question of Kalshi’s election contracts for further district-court consideration.
The ruling was issued alongside related Ninth Circuit decisions involving North American Derivatives Exchange, doing business as Crypto.com Derivatives North America, and Robinhood Derivatives LLC. In North American Derivatives Exchange, Inc. v. State of Nevada, No. 25-7187, the Ninth Circuit said Crypto.com’s sports-event contracts were not swaps under 7 U.S.C. § 1a(47)(A)(ii) and therefore were not within the CFTC’s exclusive jurisdiction. The court said the Crypto.com case had been consolidated for argument with Kalshi and Robinhood Derivatives.
How does the ruling conflict with the Third Circuit?
The split comes from the Third Circuit’s April 6, 2026, decision in KalshiEX LLC v. Flaherty, No. 25-1922. In that case, a divided panel affirmed a preliminary injunction preventing New Jersey officials from enforcing state gambling laws against Kalshi’s sports-related event contracts.
Judge David J. Porter, joined by Chief Judge Michael A. Chagares, held that Kalshi had shown a reasonable chance of success on its argument that the Commodity Exchange Act preempts New Jersey’s enforcement. The Third Circuit majority treated Kalshi’s sports-related event contracts as swaps under the CEA and concluded that federal law barred New Jersey from applying state gambling restrictions to those contracts on a CFTC-regulated market.
Judge Jane R. Roth dissented. She argued that New Jersey was regulating gambling, an area historically left to the states, and that Kalshi’s sports contracts closely resembled products offered by online sportsbooks. The Ninth Circuit’s August opinion took an approach closer to Roth’s dissent than to the Third Circuit majority.
The practical result is a direct regional conflict. In New Jersey, Kalshi has an appellate ruling protecting its sports-event contracts from state gambling enforcement at the preliminary-injunction stage. In Nevada, Kalshi lost that protection for sports contracts, allowing state enforcement to proceed while the case continues.
What role do tribes and state regulators play?
Tribal and state gaming interests have become central to the litigation because Kalshi’s theory would move sports-event contracts away from state and tribal gaming systems and into federal derivatives oversight. In the Ninth Circuit case, the court discussed the long history of state and tribal gambling regulation as part of its analysis of whether Congress clearly displaced those regimes through the Dodd-Frank Act.
The Ninth Circuit cited the Indian Gaming Regulatory Act in explaining the existing structure of tribal gaming regulation. It also treated the breadth of Kalshi’s preemption argument as a major-questions concern, stating that Congress would not be presumed to have displaced established gambling regulation through expansive readings of the words “event” and “associated with” in a Wall Street reform statute.
Twenty-four federally recognized tribes filed an amicus brief in the Ninth Circuit supporting Nevada. Separately, Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians have sued Kalshi in federal court over alleged gaming activity affecting tribal interests. Those claims are distinct from Nevada’s enforcement case, but the Ninth Circuit’s sports-contract ruling gives state and tribal challengers a major appellate precedent outside the Third Circuit.
Is the Supreme Court next?
New Jersey Attorney General Jennifer Davenport filed a petition for a writ of certiorari with the U.S. Supreme Court on September 2, 2026, according to the New Jersey Office of the Attorney General. The filing asks the justices to decide whether prediction markets can offer sports wagers without complying with state sports-gambling laws when those contracts are self-certified with the CFTC.
The Supreme Court docket for Mary Jo Flaherty, Interim Director, New Jersey Division of Gaming Enforcement, et al. v. KalshiEX, LLC shows that Justice Samuel Alito extended New Jersey’s deadline to file a certiorari petition to September 3, 2026. New Jersey filed one day before that deadline, after the Third Circuit’s April ruling and days after the Ninth Circuit issued the conflicting Nevada decision.
Davenport framed the dispute as a state-authority question. “Companies like Kalshi claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State,” she said in the September 2 announcement. Division of Gaming Enforcement Interim Director Mary Jo Flaherty said Kalshi offers wagering on NCAA games involving New Jersey teams and venues despite limits in New Jersey’s Constitution.
New Jersey’s announcement also said litigation over sports prediction markets has emerged across at least 20 states, with dozens of active suits pending. The office said 44 states, hundreds of tribes, and casinos had weighed in against Kalshi’s legal theory across the broader litigation. Those figures come from New Jersey, a party seeking Supreme Court review, but they show why state regulators see the case as larger than one exchange.
What happens to Kalshi’s sports contracts now?
In Nevada, the immediate effect is that the preliminary injunction no longer protects Kalshi’s sports-event contracts from state gaming enforcement. The Ninth Circuit left the election-contract issue for the district court, so the case is not over. The sports-contract holding, however, gives Nevada a clear appellate ruling to cite while litigation continues.
For Kalshi, the legal map is now fractured. The Third Circuit has allowed the company to keep New Jersey enforcement blocked at the preliminary stage, while the Ninth Circuit has allowed Nevada enforcement to move forward. The CFTC’s regulatory role remains central, but the Ninth Circuit refused to treat CFTC market status as a complete answer to state gambling laws.
The financial stakes are substantial. New Jersey’s September 2 Supreme Court announcement said sports betting generated $16.89 billion in revenue for states nationwide in 2025, excluding sportsbooks in tribal casinos, and asserted that 95 percent of Kalshi’s 2025 revenue came from sports betting. Because those figures were presented by a litigating state, they should be read as part of New Jersey’s case for review, not as neutral market data.
The next concrete milestone is at the Supreme Court. New Jersey has filed its petition, Kalshi will have an opportunity to respond, and the justices can either deny review or take up the preemption question that now divides the Third and Ninth Circuits. Until then, Kalshi’s sports-event contracts face different legal treatment depending on the jurisdiction.
