Kalshi has suffered a setback in its legal fight with Nevada after a federal appeals court ruled that the state can enforce its gambling laws against the prediction market operator’s sports contracts.
The Ninth US Circuit Court of Appeals issued the 3-0 decision on August 28, finding that Kalshi was unlikely to prove that the federal Commodity Exchange Act prevents Nevada from requiring a gaming licence for contracts tied to sports results.
The ruling keeps Nevada regulators’ authority intact while litigation continues. It also adds to a growing national dispute over whether prediction markets fall under state gambling rules or federal oversight by the Commodity Futures Trading Commission (CFTC).
Ninth Circuit Rejects Federal Pre-Emption Claim
Kalshi operates a CFTC-regulated designated contract market and has argued that its sports contracts qualify as swaps under the Dodd-Frank financial reforms. The appeals court rejected that position, concluding that the products carry the “hallmarks of sports betting.”
Circuit Judge Ryan Nelson wrote that “The CFTC is not a national gambling regulator,” adding, “No one suggested it was until over a decade after the law was passed.“
The court also pointed to Kalshi’s description of its service as “the first app for legal sports betting” in all 50 US states.
The decision upheld a November 2025 ruling by US District Judge Andrew Gordon, who dissolved an earlier injunction that had allowed Kalshi to continue offering sports event contracts in Nevada.
Nevada Gaming Control Board attorney Nicole Saharsky welcomed the decision, saying, “The court confirmed what has been clear since the beginning — that states regulate sports betting, and the CFTC has nothing to do with it.”
Arizona Attorney General Kris Mayes, who filed criminal charges against Kalshi in March, also supported the ruling.
Nevada Case Adds To Nationwide Legal Split
The Ninth Circuit decision conflicts with an April 6 ruling from the Third US Circuit Court of Appeals, which found that New Jersey could not apply its gambling laws to Kalshi’s federally regulated platform.
That disagreement between appellate courts could increase the possibility of US Supreme Court review. The CFTC has claimed exclusive authority over prediction markets and has challenged regulatory action in nine states.
At least Nevada, Massachusetts, Michigan and Washington have obtained court orders restricting Kalshi’s activities. Other proceedings remain active, including cases involving Connecticut and Maryland. State courts have also reached different conclusions, producing a fragmented legal landscape for prediction markets.
The dispute extends beyond sports. Kalshi also offers contracts linked to elections, economics, weather and cultural events.
Election Contracts Return To District Court
The Ninth Circuit sent Nevada’s challenge involving Kalshi’s election contracts back to Gordon’s court. His earlier injunction did not resolve those products, which the appeals panel directed him to examine under the reasoning in its latest decision.
The ruling comes as prediction markets have gained popularity since the 2024 US presidential election. Kalshi, Polymarket and other platforms have expanded their markets while facing growing scrutiny from state regulators.
Kalshi and the CFTC did not immediately respond to requests for comment.
Source:
“Kalshi cannot block Nevada oversight of prediction markets, US appeals court rules”, reuters.com, August 28, 2026
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