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Kalshi loses again as Ninth Circuit upholds Nevada’s role in prediction markets
A unanimous Ninth Circuit ruling said the Commodity Exchange Act likely does not preempt Nevada gaming rules for Kalshi’s sports event contracts, deepening a split with a prior New Jersey ruling.
CoinDesk reports a federal appeals court deal a major setback to Kalshi in its bid to prevent enforcement by Nevada gaming regulators, with a unanimous panel from the U.S. Court of Appeals for the Ninth Circuit rejecting Kalshi’s argument that federal oversight should be exclusive. The court concluded that the Commodity Exchange Act likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts.
The decision focused on whether Kalshi’s contracts fall under the CFTC’s jurisdiction as “swaps.” According to the ruling, under U.S. commodities law the sports event contracts were not “swaps” because they were treated as sports bets, a determination that further complicates how the contracts are classified.
CoinDesk notes the timing adds to legal uncertainty because earlier, in April, another federal court reached the opposite conclusion when addressing New Jersey’s regulation of Kalshi. With conflicting rulings in different circuits, the case is increasingly set up for possible U.S. Supreme Court review.
A CFTC spokesman, Zach Fulton, accused the judges of misreading the law in an email, arguing that a derivative contract structured as a swap should be considered a swap regardless of the underlying subject matter and that the Ninth Circuit created an improper exception. The ruling leaves the broader prediction market industry facing escalating legal pressure as regulators continue to challenge the framework.