Ninth Circuit's Kalshi Ruling Sets Up a Supreme Court Fight

On August 28, 2026, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit unanimously affirmed the dissolution of KalshiEX LLC's preliminary injunction against the Nevada Gaming Control Board. The panel held that Kalshi had not shown a likelihood that the Commodity Exchange Act preempts Nevada's gaming laws as applied to its sports event contracts, in case No. 25-7516.

The ruling's core finding is definitional: the court treated Kalshi's sports contracts as sports bets rather than as swaps regulated exclusively under federal commodities law. That framing lets Nevada's Gaming Control Board resume enforcing the cease-and-desist order it issued against Kalshi in March 2025, subject to whatever further appeal Kalshi pursues.

The Ninth Circuit's holding runs directly against the Third Circuit's April 6, 2026 ruling in KalshiEX LLC v. Flaherty, which found that sports event contracts meet the Commodity Exchange Act's definition of a swap and affirmed a preliminary injunction shielding Kalshi from New Jersey's gambling law on that basis. Both courts were interpreting the same statutory text and reached opposite conclusions on whether the underlying product is a federally preempted derivative or a state-regulated wager.

CFTC spokesperson Zach Fulton pushed back on the Ninth Circuit's reasoning directly, arguing that "a derivative contract structured as a swap is a swap regardless of the underlying subject matter." That statement is notable because it comes from the agency itself, not from Kalshi, showing the CFTC is treating the ruling as a threat to its own jurisdictional position, not only Kalshi's litigation.

The ruling is narrower than the sports-betting headline suggests. The panel remanded the separate question of Kalshi's election-related contracts back to the district court for further analysis, rather than resolving it alongside the sports contracts.

That split matters operationally. It confirms courts are willing to treat different categories of event contracts, sports versus elections, as separate legal questions rather than ruling on "event contracts" as one undifferentiated product line, an approach that echoes the category-specific geofencing orders already in place in Washington state.

Two federal circuits reaching opposite conclusions on the same statutory question is one of the most common reasons the Supreme Court agrees to hear a case, since only the Court can settle which reading of the Commodity Exchange Act controls nationwide. A certiorari petition tied to the Third Circuit's New Jersey ruling was already pending before this decision, and the Ninth Circuit's ruling gives that petition, or a new one arising from this case, a cleaner circuit conflict to point to.

Kalshi spokesperson Dani Lever said the company still believes its contracts are lawful under CFTC regulation and confirmed it will seek further review. Whether that means a rehearing petition, an en banc request, or a direct path toward the Supreme Court, the practical effect is that Nevada's win is not the final word even within the Ninth Circuit's own docket.

Nevada can resume enforcing its gaming law against Kalshi's sports contracts while the broader appellate process continues, separate from the state's ongoing dispute with Kalshi over whether its GeoComply-based geofencing actually keeps Nevada residents out of those markets. Neither dispute resolves the other, a platform can lose the underlying preemption question and still be litigating over whether its technical compliance measures satisfy an existing order.

For operators elsewhere, the ruling is a reminder that a favorable outcome in one circuit does not travel to another. Kalshi's preliminary injunction in Arizona, for example, rests on reasoning closer to the Third Circuit's than the Ninth Circuit's, and nothing about this ruling forces a court outside the Ninth Circuit to follow it, but it adds another data point pulling the overall trend away from Kalshi's preferred outcome.