Ninth Circuit Hands Kalshi Split Ruling
The Ninth Circuit Court of Appeals ruled on August 28, 2026 that federal commodities law likely does not shield Kalshi's sports event contracts from Nevada's state gambling regulations, according to the court's published opinion in KalshiEX, LLC v. Assad (No. 25-7516).
A three-judge panel affirmed a district court order that had dissolved a preliminary injunction Kalshi won against the Nevada Gaming Control Board, which had issued Kalshi a cease-and-desist letter arguing it was running an unlicensed sportsbook platform.
Kalshi had argued the Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over its sports event contracts because they are traded on a CFTC-designated contract market, meaning Nevada's gaming law could not apply.
Writing for the panel, Judge Ryan D. Nelson rejected that argument, finding that Kalshi's sports event contracts do not meet the Commodity Exchange Act's statutory definition of a "swap" and are therefore not covered by the federal preemption Kalshi relied on. The panel also rejected Kalshi's separate conflict-preemption and field-preemption arguments.
Election Contracts Returned To District Court
The panel did not resolve every part of Kalshi's case. Because the district court's original ruling focused only on sports contracts and never separately analysed Kalshi's election-related contracts against the same swap definition, the Ninth Circuit remanded that question for the lower court to decide.
"Because the district court did not analyze whether Kalshi's election contracts...fit within the CEA's definition of swap, we remand for the district court to consider this issue in the first instance," Judge Nelson wrote in the opinion.
Kalshi is already barred from offering election contracts in Nevada under a separate state court injunction and has geofenced the state as a result. The remaining legal question is narrower than the sports contracts dispute: whether federal commodities law preempts Nevada's regulation of election markets specifically, a point the appeals court expressly declined to answer.
A widening split between circuits
The ruling puts the Ninth Circuit at odds with the Third Circuit, which sided with Kalshi earlier in 2026 in a similar dispute over its New Jersey sports contracts, according to the opinion. That circuit split raises the likelihood of eventual Supreme Court review of how the Commodity Exchange Act interacts with state gaming law, an issue that goes beyond Kalshi to any platform offering sports-linked event contracts, including Polymarket, Crypto.com and Robinhood, which faced a related Nevada action covered in the same court proceedings.
Asked for comment, a Kalshi spokesperson told financial news outlet PYMNTS the company still believes federal law protects its markets: "The Ninth Circuit agreed with the Third Circuit on a fundamental point: federal law prevents states from regulating trading on a federally licensed exchange, like Kalshi... We will be seeking further review." A CFTC spokesperson told the same outlet the commission believes the court reached the correct conclusion on the preemption question.
Kalshi's election contracts also face scrutiny beyond Nevada. Washington state, also within the Ninth Circuit, has obtained its own court injunction covering Kalshi's election and political contracts, and Arizona has filed criminal charges against the company tied to 2028 presidential election markets, though a federal court has separately blocked Arizona from enforcing its gambling laws against Kalshi while that dispute continues.
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