- A Ninth Circuit panel ruled 3-0 that Nevada can enforce its gambling laws against Kalshi’s sports event contracts.
- Sports contracts made up more than 90% of Kalshi’s trades and 95% of its revenue in 2025, the court noted.
- The ruling conflicts with a Third Circuit decision favoring Kalshi, splitting the federal appeals courts on the question.
- The panel sent Kalshi’s separate election-contract dispute back to a lower court for further review.
LAS VEGAS – A federal appeals court ruled Aug. 28 that Nevada can enforce its gambling laws against Kalshi’s sports event contracts, rejecting the prediction-market operator’s argument that federal commodities law puts those contracts beyond state regulators’ reach.
What The Panel Decided
A three-judge Ninth Circuit panel affirmed a district court order that dissolved a preliminary injunction shielding Kalshi’s sports contracts from Nevada enforcement, according to the court’s opinion in KalshiEX, LLC v. Assad. Judge Ryan D. Nelson wrote the opinion, joined by Judge Bridget S. Bade; Judge Kenneth K. Lee concurred separately. The panel held that Kalshi failed to show a likelihood that the Commodity Exchange Act preempts Nevada’s gaming statutes as applied to contracts letting users bet on the outcome of sporting events.
The Nevada Gaming Control Board sent Kalshi a cease-and-desist letter in March 2025, telling the company it was “operating as an unlicensed sports pool” under state law. Kalshi sued, arguing its sports contracts are legal derivatives traded on a federally registered exchange and that only the Commodity Futures Trading Commission can regulate them. A district judge initially agreed and blocked Nevada from acting, then reversed himself and dissolved that order; the Ninth Circuit’s Aug. 28 ruling upholds that reversal.
A Revenue Base Built On One Product
The panel’s opinion states that over 90% of Kalshi’s trades in 2025, representing 95% of its revenue, were sports-related, even as the company markets itself as “the first app for legal sports betting in all 50 states.” The court cited that self-description twice and wrote that the contracts carry “the hallmarks of sports betting,” since they let users “essentially place prop bets” on over-unders and score-specific spreads, and chain trades into parlays.
A Commodity Futures Trading Commission rule already bars exchanges from listing gaming-related contracts, and the panel found Kalshi’s listing of the contracts unlawful under that rule independent of the broader preemption question. The agency has since floated changes of its own, a proposed CFTC gaming rule that would set state bans aside for sports contracts.
The finding leaves Kalshi’s core product exposed across the nine western states the Ninth Circuit covers, and in any other court that adopts its reading, since the same self-certified sports contracts are what the company runs nationwide.
The Kalshi Circuit Split
The Ninth Circuit’s holding directly conflicts with the Third Circuit’s ruling in a parallel New Jersey case, which found Kalshi’s sports contracts likely are federally regulated swaps beyond state reach. A Fourth Circuit appeal of a Maryland ruling against Kalshi remains pending, and district courts in Tennessee, Ohio, Arizona and New York have split on the same question over the past several months, according to the opinion’s survey of the litigation.
New Jersey, Ohio, 37 other states and the District of Columbia argued in a joint amicus brief that “Americans wagered almost $150 billion on sports in 2024,” a figure the panel quoted in explaining why states guard their authority over gambling.
What Happens Next
Nevada’s underlying enforcement action against Kalshi’s sports contracts can now proceed, a fight USA Gambling Sites has tracked in its state-by-state coverage of Nevada prediction markets. The panel sent Kalshi’s election-contract claims, a fraction of its business, back to the district court, which had never analyzed whether those contracts fit the federal definition of a swap. Kalshi can ask the full Ninth Circuit to rehear the case or petition the Supreme Court to resolve the split.