Image credit: Source: United States Court of Appeals for the Ninth Circuit filing records. Editorial illustration; not a depiction of the actual proceedings.
The Ninth Circuit Court of Appeals ruled August 28 that Kalshi's sports event contracts are not federally protected "swaps," upholding Nevada's power to ban the prediction market platform under state gambling law. A three-judge panel affirmed a district court order that dissolved Kalshi's preliminary injunction against the Nevada Gaming Control Board, in KalshiEX, LLC v. Assad, No. 25-7516.
The panel, Ryan D. Nelson, Bridget S. Bade and Kenneth K. Lee, found no dispute that Kalshi's contracts trade on its federally registered exchange, but ruled they still fail the Commodity Exchange Act's own definition of a swap because they turn on whether a sporting event happens, not on a separate financial contingency. That knocks out Kalshi's core defense: that the Commodity Futures Trading Commission holds exclusive jurisdiction and Nevada's cease-and-desist letter is preempted. The court sent Kalshi's related challenge over its election contracts back to the district court.
The ruling breaks directly with the Third Circuit, which affirmed an injunction letting Kalshi keep operating in New Jersey in KalshiEX, LLC v. Flaherty this April, a conflict the Nevada opinion itself acknowledges. Two circuits reached opposite answers on the identical statutory question, the clearest sign yet that the fight over who regulates prediction markets is headed for the Supreme Court. It builds on the four-jurisdiction divide covered in our preemption tracker.
Court filings show attorneys general from at least 30 states backed Nevada in a joint brief, alongside the American Gaming Association and the Nevada Resort Association. Gaming Control Board chairman Mike Dreitzer said the ruling "vindicates" the state's position that sports betting "needs to be properly regulated by the state." AGA chief executive Bill Miller called it "a significant win for consumer protections and taxpayers." Kalshi spokeswoman Dani Lever said the company still believes CFTC rules "as written do not prohibit sports contracts" and will seek further review.
The ruling lands on top of a rockier compliance record for Kalshi in Nevada: the company only finished geofencing the state under a contempt settlement in mid-August, and lost a separate injunction bid in Connecticut in July.
Nevada just handed the Supreme Court its clearest invitation yet
Kalshi has not lost its broader fight. It can still operate in New Jersey while that case proceeds, and its Nevada election contracts survive for now. What changed August 28 is the lineup: dozens of attorneys general are now on the public record backing state authority, and one of the two circuits that mattered most just joined them. That is what gets a split calendared, not quietly settled.