Ninth Circuit Sides With Nevada, Rules Kalshi Sports Contracts Are Gambling — Not Federal ‘Swaps’

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit on Friday handed Nevada’s gaming regulators a major victory over prediction-market giant Kalshi, ruling that the company’s sports event contracts are sports bets—not federally regulated “swaps”—and that federal commodities law does not strip the state of authority to police them. 

The 3-0 published opinion (see below) in KalshiEX, LLC v. Assad affirms in part a Las Vegas federal judge’s decision dissolving a preliminary injunction that had blocked the Nevada Gaming Control Board from enforcing state gaming statutes against Kalshi’s sports products. The panel remanded only the narrower question of Kalshi’s election contracts. 

The ruling is binding across the Ninth Circuit, including California, the nation’s largest market without legal sportsbooks, and a state where Kalshi, Polymarket, DraftKings Predictions and others have built a booming sports-contract business while traditional wagering remains illegal. 

It also deepens a split with the Third Circuit, which earlier this year sided with Kalshi against New Jersey, raising the odds of a Supreme Court fight over who regulates the prediction-market industry. 

Circuit Judges Ryan D. Nelson, Bridget S. Bade and Kenneth K. Lee, all appointed by President Donald Trump, heard argument in San Francisco in April.

The case traces to March 2025, when the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter accusing the New York-based exchange of operating an unlicensed sports pool in violation of Nevada Revised Statutes.

In February 2026, Nevada Attorney General Aaron D. Ford and the Nevada Gaming Control Board filed a civil enforcement lawsuit Tuesday against Kalshi seeking a court declaration that its sports event contracts constitute illegal unlicensed wagering and a permanent injunction to shut them down in the state. In March 2026, a Carson City judge blocked Kalshi from selling sports, election, and entertainment bets in Nevada.

Kalshi maintains its products are federally approved financial instruments, not gambling, and has fought similar enforcement in multiple states. Nevada regulators countered that the contracts function as sports pools under state law and must comply with licensing, age restrictions, and consumer protections. 

Ultimately, Kalshi did not convince the court it was likely to win its argument that federal law blocks Nevada from regulating its sports contracts.

“The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps,” Nelson wrote, quoting Shakespeare. “Just as ‘[t]hat which we call a rose by any other name would smell as sweet,’ placing sports bets, even when called by another name, is still gambling.”

Nelson added: “For Kalshi to deny that its sports event contracts are sports bets under a reasonable person’s understanding is disingenuous. … Everyone, including Kalshi, knows it when they see it.” 

Lee, concurring, pressed the statutory text even harder. “Few people would describe, say, the New York Mets’ latest loss of a game as an ‘event’” in the CEA sense, he wrote. Reading “event” and “financial, economic, or commercial consequence” to cover ordinary ballgames, he said, would upend a multibillion-dollar industry “historically regulated by states and Indian tribes.”

The panel’s core findings:

• Not swaps. Sports event contracts do not meet the Commodity Exchange Act’s definition of a “swap” in 7 U.S.C. § 1a(47)(A)(ii). They are wagers on uncertain athletic outcomes—winners, spreads, props and parlays—not instruments tied to a financial, economic or commercial consequence in the sense Congress intended. 
• No express preemption for sports products. Section 2 of the CEA gives the CFTC exclusive jurisdiction over swapstraded on a designated contract market. Because Kalshi’s sports contracts are not swaps, that exclusive-jurisdiction clause does not lock Nevada out. 
• No conflict or field preemption. Nevada law does not make compliance with federal commodities rules impossible, the court said. Operators can geofence the state. Congress left gaming regulation to the states, a division of authority reflected in the Professional and Amateur Sports Protection Act’s successor framework and longstanding federalism over casinos and sportsbooks. 
• CFTC Rule 40.11 still bars gaming contracts. The panel held that 17 C.F.R. § 40.11(a) categorically prohibits designated contract markets from listing swaps that involve, relate to, or reference gaming. Kalshi self-certified its sports contracts; the CFTC did not approve them. A pending agency rewrite of the rule, the judges said, does not erase the current ban. 
• Election contracts remanded. Because the district court did not separately analyze whether Kalshi’s election contracts qualify as swaps, the Ninth Circuit sent that piece back. Sports products accounted for more than 90 percent of Kalshi’s 2025 trades and 95 percent of its revenue, the opinion noted. 

The court also invoked the major-questions doctrine, warning that Congress does not hide a national takeover of sports betting in “oblique or elliptical language.” 

Nevada Attorney General Aaron Ford’s office, with Mayer Brown, told the panel that Kalshi’s theory would convert the CFTC into “the nation’s gaming regulator.”

The company’s marketing did not help its case: the opinion cites Kalshi advertising itself as “the first app for legal sports betting in all 50 states.”

Kalshi, a Commodities Future Trading Commission (CFTC)-regulated derivatives exchange, allows users to trade “yes/no” event contracts on real-world outcomes. While it began with elections and economics, sports contracts now dominate its volume.

The company has deep California roots: it was originally incorporated with a principal address in San Francisco, maintains California-governed terms in some filings, and is integrated with platforms like Robinhood Markets (headquartered in Menlo Park). 

California tribal gaming interests, including Blue Lake Rancheria, Chicken Ranch Rancheria, and Picayune Rancheria of Chukchansi Indians, have separately sued Kalshi in federal court, alleging revenue diversion from their casinos. This decision provides the plaintiffs ammunition.

The Nevada Attorney General’s office called Friday’s decision a major win. “Kalshi sought to sidestep Nevada’s gaming laws by claiming its sports wagering products were federally regulated financial instruments beyond the reach of state regulators,” deputy communications director Alcinia Whiters said. “The Ninth Circuit rejected that argument and made clear what we have maintained from the beginning: sports betting does not become something else simply because a company calls it an ‘event contract.’” 

Kalshi said it will keep fighting. “Despite the 9th Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review,” a company official said.