Ninth Circuit Rules Against Kalshi, Backs Nevada Gambling Law

The panel, in an opinion by Judge Ryan D. Nelson, with concurrence from Judge Kenneth K. Lee, agreed with Kalshi on one point: the Commodity Exchange Act preempts state regulation of genuine swaps traded on a designated contract market. But it found Kalshi’s sports contracts fail that threshold test. 

“The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps,” Nelson wrote. 

The opinion also pointed to CFTC Regulation 40.11(a), which separately bars designated contract markets from listing products tied to gaming, as an independent reason Kalshi’s sports offerings cannot claim federal protection.

The case traces back to a cease-and-desist letter that the Nevada Gaming Control Board sent to Kalshi in March 2025, ordering it to stop offering sports-event contracts in the state. Kalshi sued and won a preliminary injunction from US District Judge Andrew P. Gordon in April 2025. Gordon dissolved that injunction in November 2025 after further briefing. 

Kalshi appealed, and the Ninth Circuit heard oral argument on April 16, 2026, before issuing Friday’s ruling. 

The court also rejected parallel requests for injunctive relief from Crypto.com and Robinhood, and sent Kalshi’s separate election-contract claims back to the district court for further review.

Nevada Gaming Control Board Chairman Mike Dreitzer called the ruling a vindication.

“This completely vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state,” Dreitzer said in a statement released by the board. 

Governor Joe Lombardo added that “prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework.”

Kalshi spokesperson Dani Lever said the company would keep fighting.

“Despite the Ninth Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review,” Lever said.

For traders, the ruling reinforces restrictions already in place: Kalshi has been under a Nevada court order since earlier this year to geofence bettors out of the state on sports, election, and entertainment contracts, and the Gaming Control Board is separately seeking a $120,000-a-day penalty over disputed compliance with that order. 

Friday’s decision gives Nevada firmer legal footing to keep pressing that enforcement while the broader jurisdictional fight continues, and it leaves Nevada's regulated gambling market the only fully state-compliant way to bet on sports there for now.

In April 2026, the Third Circuit ruled the opposite way in a 2-1 decision over New Jersey, KalshiEX LLC v. Flaherty, holding that Kalshi’s sports contracts are swaps preempted from state regulation. Judge Jane R. Roth dissented in that case. 

With the Ninth Circuit now breaking the other way on the same legal question, similar Kalshi challenges remain unresolved in the Second, Fourth, and Sixth Circuits, covering states including New York, Connecticut, Maryland, Tennessee, and Ohio. 

A circuit split of this kind is one of the clearest signals that the US Supreme Court will eventually need to settle whether prediction markets can offer sports wagering nationwide outside state licensing regimes, or whether each state’s gambling law still applies. 

Follow Gambling.com's coverage of the battle to regulate prediction markets, as the Second, Fourth, and Sixth Circuit cases, and any Supreme Court petition, move forward.