TLDR
- The Ninth Circuit Court of Appeals ruled against Kalshi, saying Nevada has the right to regulate its sports event contracts
- The court said Kalshi’s contracts are sports bets, not “swaps” under federal commodities law
- This conflicts with an April ruling that blocked New Jersey from regulating Kalshi, creating a circuit split
- The CFTC argues it has exclusive jurisdiction over prediction markets and says the court misread the law
- Legal experts and the CFTC say the U.S. Supreme Court will likely need to settle the dispute
A federal appeals court has ruled against prediction markets platform Kalshi, saying Nevada has the right to regulate its sports betting contracts. The decision adds more legal pressure to a fast-growing industry already fighting battles in multiple states.
LATEST: 🇺🇸 The Ninth Circuit appeals court ruled sports-related event contracts from Kalshi, Crypto.com and Robinhood aren't "swaps," rejecting their bid to block Nevada's gaming regulator from halting operations. pic.twitter.com/Yh2uhGOmLC
— CoinMarketCap (@CoinMarketCap) August 29, 2026
The U.S. Court of Appeals for the Ninth Circuit issued a unanimous ruling on Friday. The three-judge panel said Kalshi had not shown that federal law blocks Nevada from applying its gaming rules to the company’s sports event contracts.
What the Court Decided
The court said Kalshi’s sports event contracts are likely sports bets under Nevada law, not “swaps” covered by the federal Commodity Exchange Act. That distinction matters because swaps fall under the jurisdiction of the Commodity Futures Trading Commission.
The court said: “The CEA likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts.”
Nevada had sent Kalshi a cease-and-desist letter in 2025, ordering the company to stop offering election and sports event contracts in the state. Kalshi sued Nevada and asked for an injunction to keep operating. A lower court first granted that injunction, then dissolved it. The Ninth Circuit upheld that decision.
Kalshi had already pulled out of Nevada and other states that issued similar orders.
A Split Between Federal Courts
This ruling directly conflicts with a ruling from April, when a different federal court told New Jersey it could not regulate Kalshi. That opposing outcome creates what is called a circuit split.
The CFTC said the Ninth Circuit misread the law. Spokesperson Zach Fulton said the ruling “invented a new and atextual exception” to federal commodities law. He added that the case is now “teed up for resolution by the Supreme Court.”
CFTC Chair Michael Selig has said the agency has “exclusive jurisdiction” over prediction markets, including sports contracts. The CFTC has filed its own lawsuits against several states to defend that position.
Nevada Gaming Control Board Chairman Mike Dreitzer called the ruling a vindication. “This is sports betting and needs to be properly regulated by the state,” he said.
Kalshi pushed back on the decision. Spokesperson Dani Lever said the company still believes federal rules do not prohibit sports contracts and that the CFTC is working to clarify its regulations. Kalshi said it would seek further review.
The American Gaming Association, which represents traditional sportsbooks, praised the ruling. The group called it “a big loss for Kalshi and other backdoor sports gambling operations who defy state laws.”
Connecticut filed a new lawsuit against Kalshi earlier this week, adding to a growing list of active state legal challenges. With courts now reaching opposite conclusions, the Supreme Court looks increasingly likely to weigh in.
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