- A Ninth Circuit panel ruled that Nevada can likely apply its gaming laws to Kalshi’s sports event contracts.
- The decision conflicts with an April federal ruling involving New Jersey, increasing the legal split over prediction markets.
- Kalshi said it will seek further review while Nevada regulators and sports betting rivals welcomed the ruling.
A new Kalshi ruling has added pressure on the company and the wider U.S. prediction market sector after a federal appeals court rejected its effort to block Nevada from enforcing state gaming rules. The unanimous decision from the U.S. Court of Appeals for the Ninth Circuit said Nevada regulators likely still have authority over Kalshi’s sports event contracts, even though the platform is regulated by the Commodity Futures Trading Commission under the Commodity Exchange Act. The outcome also sharpens a growing legal divide because another federal court reached the opposite result in April in a dispute involving New Jersey, raising the chances that the U.S. Supreme Court may eventually need to weigh in.
Kalshi ruling backs Nevada regulators
The Ninth Circuit issued its unanimous decision on Friday and disagreed with Kalshi’s position that Nevada had no role in supervising its business activity. Kalshi had argued that oversight should rest with its federal regulator, the CFTC, and with the Commodity Exchange Act that governs the platform.
According to the ruling, the panel concluded that the Commodity Exchange Act likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts. The judges also rejected the idea that the activity should be treated as swaps under CFTC jurisdiction, stating that under U.S. commodities law the sports event contracts were not swaps because they were sports bets.
Split between federal courts grows
The latest decision did not settle the matter across the country. Instead, it widened the divide because in April another federal court reached the opposite conclusion when it told New Jersey that it had no business regulating Kalshi.
That conflict between federal courts creates a clearer legal rift over event contracts and prediction markets. The source said the opposing rulings make it even more likely that the U.S. Supreme Court will have to address the core question facing the industry.
Reactions to the Kalshi ruling
CFTC spokesman Zach Fulton said in an email that the Ninth Circuit has now created a circuit split that calls out for resolution by the Supreme Court. He accused the judges of misreading the law and argued that a derivative contract structured as a swap is a swap regardless of the underlying subject matter, with only onions and movie box office receipts named as statutory exceptions.
Nevada officials welcomed the outcome. Nevada Gaming Control Board Chairman Mike Dreitzer said the decision completely vindicates what the state had been saying all along. He added that this is sports betting and needs to be properly regulated by the state, and his statement also referenced betting at Robinhood and Crypto.com.
Kalshi, however, pointed to what it viewed as an important part of the opinion. Spokesperson Dani Lever said the Ninth Circuit agreed with the Third Circuit on a fundamental point that federal law prevents states from regulating trading on a federally licensed exchange like Kalshi.
Lever also said Kalshi still believes the CFTC regulations as written do not prohibit sports contracts and said the CFTC is working to clarify those regulations. She added that the company will be seeking further review.
Wider legal pressure on prediction markets
State authorities in Nevada had opposed prediction market businesses since 2025 and repeated on Friday that Kalshi had been engaged in illegal wagering under Nevada gambling laws. The company had already pulled out of Nevada and other jurisdictions in response to local orders.
The dispute is part of a broader fight involving prediction market companies and state regulators. The source said Kalshi and other businesses in the sector have been battling state authorities for months through a long list of active lawsuits in local and federal courts, and that Connecticut filed the latest lawsuit earlier this week.
The CFTC is also directly involved in the broader legal fight. According to the source, the federal regulator is pursuing a number of its own lawsuits arguing that it should have sole jurisdiction over Kalshi and similar companies. Meanwhile, rivals in sports wagering celebrated Friday’s court outcome, with the American Gaming Association calling it a significant win for consumer protections and taxpayers and a big loss for Kalshi and other backdoor sports gambling operations that defy state laws.
Conclusion
This Kalshi ruling marks a major setback for the company’s effort to keep state gaming regulators out of its business and gives Nevada support in treating the sports event contracts as sports betting. At the same time, the case leaves the legal picture less settled nationally because a federal court previously ruled the other way in New Jersey. Kalshi plans to seek further review, while the CFTC, state regulators, and sports betting interests continue to push conflicting views on who should control these markets. With active lawsuits continuing and federal courts now split, the Kalshi ruling has become a central point in the fight over prediction market oversight in the United States.
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