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Ninth Circuit rules Kalshi sports contracts are not swaps
The decision also affirmed that Nevada can enforce its gaming laws against Kalshi while an identical product remains federally shielded in New Jersey under the Third Circuit ruling.
The Ninth Circuit ruled that KalshiEX LLC's sports event contracts are not swaps under the Commodity Exchange Act, clearing the way for Nevada to enforce its gaming laws against the prediction market. The Aug. 28 opinion in KalshiEX LLC v. Assad reversed the earlier path of shielding the product in Nevada, and it turns on whether the contracts fall under the CFTC's exclusive jurisdiction.
The court said the key statutory question is whether the agreement is dependent on an event’s occurrence, nonoccurrence, or extent. Kalshi argued that Super Bowl outcomes fit that definition, but the panel rejected the reading, saying whether the Super Bowl happens is the occurrence of an event, while who wins is the outcome of an event, not the event dependency itself.
The Ninth Circuit also pointed to a CFTC regulation that bars event contracts that involve, relate to, or reference gaming. It found Kalshi’s self-certification process, which the exchange uses to list products without prior CFTC approval, was unlawful under both the CEA’s special rule for event contracts and the regulation.
The ruling highlights a split with the Third Circuit. According to The Defiant, the Third Circuit’s April 6 decision in KalshiEX LLC v. Flaherty reached the opposite conclusion on the same statutory text, meaning the product’s treatment differs by jurisdiction, with Nevada facing enforcement while New Jersey remains shielded under that earlier ruling.