Ninth Circuit Rules Against Kalshi in Nevada, Setting Up Likely Supreme Court Fight
A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit unanimously ruled on August 28 that Nevada can regulate Kalshi's sports event contracts under its state gambling laws, rejecting the prediction-market operator's argument that federal commodities law shields those contracts from state oversight. Writing for the panel, Judge Ryan Nelson said Kalshi's product "has a gambling problem," pointing to the company's own marketing of itself as offering "the first app for legal sports betting in all 50 states" even as it claimed exemption from state gaming regulation.
What the court decided
The case arose from Nevada Gaming Control Board enforcement action against Kalshi, with Crypto.com and Robinhood separately seeking injunctive relief that the panel also rejected. The core legal question was whether Kalshi's sports outcome contracts qualify as "swaps" under the Commodity Exchange Act simply because they are listed on a CFTC-registered exchange — a designation Kalshi has argued puts them beyond the reach of state gambling law entirely. The Ninth Circuit disagreed, holding that a sports contract doesn't become a federally regulated financial instrument just because of how it's labeled or where it's listed.
A split with another federal circuit
The ruling directly conflicts with an April 2026 decision from the Third Circuit that went the other way, protecting Kalshi's ability to operate in New Jersey. Outcomes have also diverged at the state level: Kalshi has faced unfavorable rulings in states including Ohio, Maryland, and Washington, while receiving preliminary relief in Arizona and Tennessee, and Connecticut recently filed its own suit after being denied an injunction against the company. That growing patchwork — now including a direct circuit-court conflict between the Third and Ninth Circuits — is what legal analysts say makes Supreme Court review increasingly likely, since a circuit split is one of the clearest signals the Court typically looks for when deciding which cases to take up.
Why it matters to US bettors
The outcome of this fight will help determine whether prediction markets like Kalshi and Polymarket can keep offering sports-outcome contracts nationwide as an alternative to state-licensed sportsbooks, or whether they get confined to states where courts or regulators have allowed them to operate. For now, the ruling changes nothing immediately for bettors outside Nevada, but it strengthens the legal position of states seeking to block or restrict these products and adds pressure toward a nationwide resolution, whether that comes from the Supreme Court, Congress, or the CFTC itself. The case now returns to the district court on a related question involving Kalshi's election contracts, and Robinhood has indicated it plans to appeal.