The ruling from the United States Court of Appeals for the Ninth Circuit that Kalshi sports contracts are bets, not federally protected swaps, has almost assuredly set up what may be the prediction market industry’s inevitable next stop: the U.S. Supreme Court.
The decision directly conflicts with the Third Circuit’s Kalshi-friendly New Jersey ruling, giving both the Commodity Futures Trading Commission and Kalshi a clear reason to seek high-court intervention.
Last week’s 3-0 opinion permitted Nevada to enforce its gaming laws against Kalshi’s sports contracts. It rejected the CFTC’s central claim that the Commodity Exchange Act gives it exclusive jurisdiction over the products.
The reaction has been just as divided as the underlying litigation. State regulators and the casino industry called it a win for consumer safeguards and state sovereignty. At the same time, the CFTC said the panel misread the statute and invented a new limitation on federal derivatives law.
CFTC calls for Supreme Court
The CFTC was blunt about what comes next.
“The Ninth Circuit has now teed up a circuit split that calls out for resolution by the Supreme Court,” CFTC spokesman Zach Fulton told The New York Times.
Fulton said the court “erred today” and accused the panel of inventing an exception to the Commodity Exchange Act.
The CFTC’s position remains that its exclusive jurisdiction reaches swaps traded on registered designated contract markets. While the Ninth Circuit agreed with that general proposition, it also found that Kalshi’s sports event contracts are not swaps in the first place.
The commission sees product structure and exchange registration as the relevant federal hook. The Ninth Circuit focused on the actual substance of the trade, a customer risking money on the result of a sporting event for a potential payout, and concluded it is sports betting.
Nevada says ruling vindicates state
Nevada officials said the decision validated their position from the start.
“This completely vindicates what we have been saying all along,” Nevada Gaming Control Board Chairman Mike Dreitzer said. “This is sports betting and needs to be properly regulated by the state.”
The Nevada attorney general’s office called the ruling a “major victory for Nevada and our longstanding authority to regulate gaming in our state.”
Nevada Atty. Gen. Aaron Ford’s office said Kalshi “sought to sidestep” the state’s gaming laws by claiming its sports products were federally regulated financial instruments outside state authority. The Ninth Circuit, the office said, made clear that “sports betting does not become something else simply because a company calls it an ‘event contract.’”
Arizona sees enforcement opening
Arizona Atty. Gen. Kris Mayes also celebrated the decision, calling it “a significant win for states’ authority to regulate gambling operations.”
“Calling a sports bet a ‘swap’ doesn’t make it one,” Mayes said.
Mayes argued that Kalshi’s federal-preemption position would have “effectively federalized sports betting regulation nationwide” while displacing decades of state and tribal gambling oversight.
Kalshi previously won preliminary relief against Arizona gambling enforcement, but the Ninth Circuit’s new ruling gives Mayes’ office a stronger basis to seek to unwind that protection.
Arizona’s case is pending in the Ninth Circuit, and the court’s Nevada decision is binding precedent for the same circuit.
AGA backs Nevada
The American Gaming Association also applauded Nevada’s win, framing it as a decision that protects the state and tribal regulatory system from a federal workaround.
AGA President Bill Miller said the ruling was “a significant win for consumer protections and taxpayers,” praising Nevada’s leadership in defending the state- and tribal-regulated gaming framework.
That reaction tracks the broader commercial gaming industry’s core concern. Licensed sportsbooks pay state taxes, comply with responsible-gaming mandates, use geolocation technology and operate under state-level integrity and licensing standards. The industry has argued prediction market platforms are competing for the same sports betting customers without being subject to the same framework.
Kalshi plans further review
Kalshi said it disagrees with the ruling and intends to keep fighting.
A company spokeswoman said Kalshi believes existing CFTC regulations do not prohibit sports contracts and pointed to the CFTC’s ongoing effort to clarify its event-contract rules.
The company said it will seek further review.
That next step could take several forms. Kalshi can request a panel rehearing or an en banc rehearing before the Ninth Circuit, and it can ultimately petition the Supreme Court. The published decision also gives Kalshi a clearer legal case for Supreme Court review because the Ninth Circuit explicitly rejected the Third Circuit’s New Jersey reasoning.
The Ninth Circuit said the Third Circuit’s interpretation relied too heavily on broad dictionary definitions of “event” and ignored the larger statutory context. The panel said treating a sporting result as a swap would leave no limiting principle and would make nearly every type of sports wager potentially subject to CFTC oversight.
States covered by Ninth Circuit
The ruling is binding appellate precedent across the Ninth Circuit, although its practical impact still depends on each state’s gambling laws, pending lawsuits and enforcement posture.
The Ninth Circuit covers:
- Alaska
- Arizona
- California
- Guam
- Hawaii
- Idaho
- Montana
- Nevada
- Northern Mariana Islands
- Oregon
- Washington
For the states in that footprint, the Ninth Circuit has now held that Kalshi did not show that the Commodity Exchange Act preempts state gaming rules as applied to its sports-event contracts. It also held that courts can determine whether a product is a swap without requiring a state to first bring an Administrative Procedure Act challenge against the CFTC.
The court did not decide Nevada’s separate challenge to Kalshi’s election contracts. That issue was remanded to the district court, meaning the sports contract holding is the immediate legal consequence.
Other circuits await rulings
The Ninth Circuit now joins a fragmented national legal map.
Along with the Third Circuit, there are appeals in the Second, Fourth, Sixth, and Seventh Circuits. The result is the kind of interstate inconsistency the Supreme Court often steps in to resolve.
The ruling is not a nationwide ban on Kalshi sports contracts, and it does not end the CFTC’s jurisdictional campaign over prediction markets. But it is a powerful appellate rejection of the industry’s preferred legal model.
