The Ninth US Circuit Court of Appeals in San Francisco has ruled against Kalshi in the operator’s efforts to file an injunction against Nevada regulators, having previously been prohibited from offering prediction market services in the Silver State during July.
As part of a unanimous 3-0 decision, the court determined that the Commodity Exchange Act (CEA) is unlikely to pre-empt regulations enforced by the Nevada Gaming Commission as applied to sports event contracts.
The ruling may represent the most notable victory over prediction markets to date for state regulators, as fellow jurisdictions could now reference the decision in ongoing legal matters.
Kalshi attempted to argue that only the Commodity Futures Trading Commission (CFTC) maintains regulatory authority over its sports event contracts, rather than falling under requirements enforced by state bodies.
"Despite the Ninth 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," Kalshi spokesperson Dani Lever said.
"We will be seeking further review."
Following the decision, American Gaming Association (AGA) President & CEO Bill Miller celebrated the “significant win,” describing the ruling as a victory for consumers and taxpayers.
“The Ninth Circuit’s unanimous decision confirmed state and voter choice about sports betting in their communities,” Miller said.
“The AGA applauds Nevada’s leadership for protecting and preserving the state- and Tribal-regulated gaming framework. This ruling is a significant win for consumer protections and taxpayers. It is a big loss for Kalshi and other backdoor sports gambling operations who defy state law.”
Miller has previously worked with Tribal organizations such as the Indian Gaming Association (IGA) to push for stricter regulatory enforcement over prediction markets and protect Tribes’ economic sovereignty.
On August 17, the Nevada Gaming Control Board (NGCB) alleged Kalshi failed to stop sports, election and entertainment betting in the state by a previously agreed upon August 12 deadline, moving to fine the operator $120,000 per day.
The NGCB originally announced that a deal had been struck between itself and Kalshi to formally cease its prediction market operations within state borders during July, following the Nevada Supreme Court’s denial of the operator’s bid to circumvent geolocation measures.
Speaking on the court's August 28 decision, NGCB Chairman Mike Dreitzer said: “We are pleased with the Ninth Circuit’s ruling today in favor of Nevada. This completely vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state.
"The (NGCB) has been regulating gaming in the state of Nevada for more than 70 years in accordance with the highest standards and best practices. We will continue to vigorously enforce Nevada law to safeguard gaming in our state."
A Connecticut federal court chose to deny Kalshi’s motion for a preliminary injunction against state regulators on August 10, ruling sports-event contracts cannot be defined as ‘swaps’ under the CEA
