Ninth Circuit says Nevada can enforce gambling laws against Kalshi, raising Supreme Court odds

A federal appeals court has said Nevada may apply its gaming laws to Kalshi, a major setback for the prediction-market platform and a useful data point for anyone watching where sports-event contracts end and gambling regulation begins. The split between federal circuits also makes a Supreme Court review look more plausible than it did yesterday.

1. The U.S. Court of Appeals for the Ninth Circuit ruled on Friday, unanimously in a three-judge panel, that sports event contracts do not operate as federally regulated swaps under the Commodity Exchange Act (CEA). That overturns a prior injunction that had limited Nevada regulators’ reach over these products.
2. In a 50-page opinion, the panel said federal law probably does not preempt Nevada’s gaming rules. Judge Ryan Nelson wrote that Kalshi’s contracts should be read as sports bets regardless of what the company calls them, even quoting Romeo and Juliet to make the point that a rose smells the same by any other name. He also called Kalshi’s denial that the products are sports bets “disingenuous.”
3. Mike Dreitzer, chairman of the Nevada Gaming Control Board, welcomed the ruling as confirmation that these contracts should be regulated as sports betting at the state level. For operators and PSPs, the practical question is obvious: if a product is treated as gambling rather than a federal swap, the compliance path changes with it.
4. The American Gaming Association (AGA) also backed Nevada. According to an AGA calculator, U.S. states have lost more than $1 billion in sports betting tax revenue because of the growth of prediction markets. AGA president Bill Miller framed the decision as a win for consumer and taxpayer protection.
5. The Commodity Futures Trading Commission (CFTC) says it has exclusive jurisdiction over these contracts. Its chairman, Michael Selig, said in March that state commissions were trying to effectively nullify federal law, and he promised to defend that jurisdiction after New York filed a $36 billion lawsuit against Kalshi last month. The CFTC did not respond to a request for comment.

The circuit split is the real pressure point here. The Ninth Circuit’s ruling conflicts with an April Third Circuit decision, which by 2-1 said federal law prevents New Jersey from enforcing its gaming rules against Kalshi’s contracts. That kind of split is exactly the sort of thing that can pull the U.S. Supreme Court in.

The market is already pricing that in: a Polymarket contract on whether the Supreme Court will take the case before December 31 jumped from about 30% to 64% on Friday, with volume topping $976,000. New Jersey has until September 3 to decide whether to appeal.