Ninth Circuit Panel Upholds Nevada Oversight of Kalshi Sports Contracts in Unanimous Ruling

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit issued a unanimous decision on August 28, 2026, that denied prediction market operator Kalshi any injunction against Nevada gaming regulators and confirmed those regulators retain authority over the company's sports event contracts, and the opinion authored by Judge Ryan Nelson treats the contracts as gambling activities under state law instead of swaps regulated solely by the Commodity Exchange Act.

The ruling came after the Nevada Gaming Control Board had already served Kalshi with a cease-and-desist order, and the Ninth Circuit decision strengthens the board's position while creating an explicit conflict with an earlier Third Circuit ruling that addressed similar questions in another jurisdiction.

Background of the Dispute and Kalshi's Position

Kalshi had argued its event contracts fell under federal oversight through the Commodity Futures Trading Commission because they qualified as swaps, yet Nevada officials maintained the contracts amounted to sports betting and therefore required state licensing and compliance, and the board moved quickly once it determined the offerings violated existing gambling statutes.

Observers note that Kalshi sought federal court relief to block the cease-and-desist action, but the district court declined to grant a preliminary injunction, and the Ninth Circuit panel then reviewed that refusal on appeal, ultimately agreeing that Nevada retained its regulatory role.

Details of the Ninth Circuit Decision

The panel examined whether the contracts met the definition of swaps under federal law or instead constituted wagers on sporting events under Nevada statutes, and it concluded that state law applied because the contracts involved outcomes tied directly to athletic competitions rather than broader economic indicators, while the unanimous vote underscored the clarity the judges found in the statutory distinction.

According to the opinion filed on August 28, 2026, the Commodity Exchange Act does not preempt Nevada's authority in this instance, and the court remanded the case for further proceedings consistent with that holding, yet Kalshi announced it would continue to comply with the restrictions imposed in Nevada while pursuing additional review.

The decision highlights how prediction market platforms must navigate overlapping federal and state frameworks, and the panel rejected Kalshi's request for broader injunctive relief that would have prevented Nevada from enforcing its gaming rules during ongoing litigation.

Conflict with the Third Circuit and Path to Supreme Court

Legal analysts have pointed out that the Ninth Circuit outcome stands in direct contrast to a prior Third Circuit ruling that reached a different conclusion about similar contracts in another state, and this split among circuits increases the likelihood that the U.S. Supreme Court may eventually accept review to resolve the inconsistency.

Those who follow derivatives regulation note that such circuit splits often prompt higher-court intervention, while Kalshi has stated it intends to seek further appellate consideration, and the company continues to operate its platform under the limitations now confirmed for Nevada users.

Regulatory Implications and Industry Response

The Nevada Gaming Control Board views the Ninth Circuit affirmation as validation of its enforcement approach, and other state regulators are watching closely because the decision signals that event contracts linked to sports results may trigger state licensing requirements even when the operator holds federal derivatives registration.

Industry participants have observed that platforms offering similar products now face clearer guidance in the Ninth Circuit's jurisdiction, yet the ongoing compliance obligations in Nevada demonstrate how operators must adjust offerings on a state-by-state basis while federal litigation proceeds.

Conclusion

The Ninth Circuit's unanimous ruling on August 28, 2026, solidifies Nevada's ability to regulate Kalshi's sports event contracts as gambling under state law and denies the requested injunction, and the resulting circuit split with the Third Circuit positions the matter for potential Supreme Court consideration as Kalshi pursues additional review while maintaining compliance within Nevada.