The Ninth Circuit Court of Appeals on Wednesday denied the request from Kalshi to rehear its case concerning sports contracts in Nevada, leaving the prediction market operator with only the U.S. Supreme Court as a path to overturn the ruling.
The same three-judge panel that ruled against Kalshi in August stood their ground to unanimously deny both the petition for panel rehearing and rehearing en banc, or in other words.
“The full court has been advised of the petition for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc,” the ruling said.
Kalshi now has 90 days to petition the Supreme Court for review, where New Jersey is already asking the justices to weigh in on the same legal question.
What the Ninth Circuit’s ruling means
Wednesday’s decision leaves in place the panel’s August ruling, which allows the Nevada Gaming Control Board to enforce state gambling laws against Kalshi.
The panel found that Kalshi’s sports event contracts likely do not qualify as “swaps,” meaning federal commodities law likely does not preempt Nevada’s gaming laws.
“The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps,” the panel wrote in August.
The ruling’s reach extends beyond Nevada to other states in the Ninth Circuit:
- Alaska
- Arizona
- California
- Hawaii
- Idaho
- Montana
- Oregon
- Washington
Kalshi has already lost another Ninth Circuit appeal that forced it to geofence three tribal lands in California.
Courts split on sports event contracts
Kalshi took another loss in the Sixth Circuit decision that allows Ohio and Tennessee to enforce state gambling laws. The panel went further than the Ninth Circuit, finding the contracts are not swaps and that state law is not preempted either way.
Ohio wasted no time, sending cease-and-desist orders to 10 operators and brokers last month.
While Kalshi has taken multiple appellate losses, the prediction market operator is holding onto a favorable Third Circuit ruling in New Jersey, where the court upheld Kalshi’s preliminary injunction against the state 2-1 in April. A federal judge in Illinois also granted the platform a preliminary injunction.
More appellate decisions are on the way, with Kalshi appealing a loss to Utah in the 10th Circuit, where the state filed criminal charges against Kalshi’s co-founders.
