Nevada · Appeals · Business and Corporate Law
Is Kalshi legal in Nevada? What the Ninth Circuit ruled on sports contracts
If you run or trade on a prediction market, Nevada can keep enforcing its gaming laws against sports event contracts for now. The Ninth Circuit said those contracts are likely sports bets, not swaps, the financial contracts only federal regulators oversee. Kalshi has asked the court to rehear the case.
At a glance
The practical result
- Court
- Ninth Circuit, 3-0
- Outcome
- Order blocking Nevada stays canceled
- Law
- Commodity Exchange Act, the federal law on futures and swaps
- Immediate effect
- Nevada may enforce its gaming laws
In this article
- What the Ninth Circuit decided
- Is Kalshi gambling? Why Nevada says yes
- How federal derivatives law enters the dispute
- How the panel ruled on each argument
- How the Kalshi lawsuit got here
- What the ruling means for prediction-market operators
- What the ruling does not settle
- What to watch if your business offers event contracts
- Your questions about the Kalshi Nevada ruling
Short answer: Is Kalshi legal in Nevada? For now, Nevada gaming regulators can keep enforcing state law against Kalshi's sports event contracts while the Kalshi lawsuit goes on. In KalshiEX v. Assad, a unanimous Ninth Circuit panel held that Kalshi had not shown the federal Commodity Exchange Act likely overrides Nevada's gaming laws, so the lower court was right to lift the court order that had blocked them. The ruling is an early one, it did not decide Kalshi's election contracts, and Kalshi has asked the court to rehear it.
What the Ninth Circuit decided
On August 28, 2026, in one of four rulings in August 2026 that tested how far the government can go, the Ninth Circuit affirmed an order by Chief U.S. District Judge Andrew P. Gordon of the District of Nevada. That order canceled the preliminary injunction, a temporary court order, that had stopped Nevada from enforcing its gaming laws against Kalshi's sports event contracts. The panel was Judges Ryan D. Nelson, Bridget S. Bade, and Kenneth K. Lee. Judge Nelson wrote the opinion, and Judge Lee wrote a separate opinion agreeing with the result.
The court's key finding was narrow in form but large in effect. Kalshi had not shown it was likely to win its argument that federal law preempts, or overrides, Nevada's gaming rules as applied to its sports contracts. The court sent one piece back: the district judge never looked at Kalshi's election contracts, so the panel returned that issue to him to decide first. A day earlier, another Ninth Circuit panel left California's gun-store surveillance law in place, a reminder that this court often reviews state rules on regulated businesses.
The same panel decided two companion appeals that day. In short unpublished rulings, it also affirmed the district court in the appeals brought by Crypto.com's derivatives exchange and by Robinhood Derivatives. Because the court was reviewing an early order, it asked only whether the trial judge made a clearly unreasonable call, not who wins the whole case. An appeals lawyer can explain what a ruling at this stage controls and what goes back to the trial court.
Is Kalshi gambling? Why Nevada says yes
Kalshi is a designated contract market, an exchange registered with the Commodity Futures Trading Commission (CFTC), the federal regulator that banking and finance lawyers deal with on futures and swaps. In January 2025 it began offering sports event contracts, which pay out based on things like who wins a game, point spreads, and multi-leg "combos." According to the opinion, Kalshi advertised itself as "the first app for legal sports betting in all 50 states."
In March 2025, the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter. The Board concluded the contracts were "a system or method of wagering on sporting events and other events" and that Kalshi was "operating as an unlicensed sports pool" under Nevada Revised Statutes 463.160 and 463.245. It warned of civil or criminal enforcement if Kalshi kept offering them in Nevada. If your business gets a letter like this, lawyers who handle disputes with government agencies can tell you what it demands and how fast you need to respond.
After the ruling, Board Chairman Mike Dreitzer said, "This is sports betting and needs to be properly regulated by the state." The Board's position is that anyone offering these contracts in Nevada needs a state gaming license. That is the regulator's view, and the court's ruling is still preliminary.
- Over 90%
- of Kalshi's trades in 2025 were sports related, per the opinion
- 95%
- of Kalshi's 2025 revenue came from those sports trades
- About $150B
- wagered by Americans on sports in 2024, per a states' brief
How federal derivatives law enters the dispute
Kalshi's case rests on one federal provision. Section 2(a)(1)(A) of the Commodity Exchange Act gives the CFTC "exclusive jurisdiction" over swaps and certain other transactions "traded or executed" on a designated contract market. Preemption means that when a federal law covers something, state rules on it give way. If Kalshi's contracts fell inside that grant, Nevada would be pushed out.
The court agreed that this provision does preempt state law for the transactions it covers, and nobody disputed that Kalshi's contracts trade on a registered exchange. So the whole case turned on a definition: is a sports event contract a "swap"? Federal law defines a swap to include a contract that pays out based on "the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence."
The panel said no. Read in context, it held, the outcome of a game is not the kind of "event" the definition means, and it is not "associated with" a financial consequence the way interest rates, currencies or weather are. The court added that reading the definition to reach sports would hand the CFTC national control of gambling. Under the major questions rule, courts expect Congress to say so clearly before an agency gets power that big, and Congress had not. In the court's words, the CFTC "is not a national gambling regulator."
How the panel ruled on each argument
| Kalshi's argument | What the panel held |
|---|---|
| Only a lawsuit against the CFTC can decide what counts as a swap | Rejected. Nevada is enforcing its own law, not attacking a CFTC decision, so the court can read the statute itself. |
| Express preemption: the law's own words give the CFTC exclusive control | Partly accepted, then rejected. The words do override state law for swaps on an exchange, but these contracts are likely not swaps. |
| The contracts are "excluded commodities", a federal category for things like events with economic effects | Rejected. They lack the required link to a financial, commercial, or economic consequence. |
| The Special Rule, which lets the CFTC bar gaming contracts, leaves the issue to the CFTC | Rejected. The CFTC's current rule, 17 C.F.R. § 40.11, bars listing gaming contracts, and the CFTC never approved these. |
| Conflict preemption: obeying Nevada would break federal rules | Rejected. Kalshi could geofence, meaning block users by location, as licensed Nevada operators do, without losing federal status. |
| Field preemption: federal law covers the whole subject, leaving no room for states | Rejected. Federal law covers swaps on exchanges, but not gambling, which states regulate. |
| Kalshi faces irreparable harm, meaning harm money can't fix later | Rejected. Blocking Nevada users costs little for a company Kalshi's size, and the other harms are speculative or self-inflicted. |
How the Kalshi lawsuit got here
After the Board's March cease-and-desist letter, Kalshi sues Nevada's gaming regulators in federal court in Nevada.
Judge Gordon grants Kalshi a preliminary injunction, blocking enforcement while the case goes on.
The same court denies Crypto.com an injunction, holding its sports contracts are not swaps.
Judge Gordon cancels Kalshi's injunction, relying on the same reasoning.
The Ninth Circuit hears argument in the Kalshi, Crypto.com and Robinhood appeals together.
The CFTC publishes a proposed rule to replace its current gaming-contract rule.
The Ninth Circuit affirms, 3-0, and remands the election-contract question.
Kalshi asks the panel and the full court to rehear the case. No ruling on that request as of September 24, 2026.
Crypto.com files a Supreme Court petition, docketed as No. 26-344.
What the ruling means for prediction-market operators
Right now, no court order protects Kalshi's sports contracts from Nevada enforcement. The panel noted that licensed Nevada operators geofence, blocking users by location, and said Kalshi could do the same. Nevada's Board has said it will "continue to vigorously enforce Nevada law."
The reasoning reaches beyond Kalshi. The Crypto.com ruling applied the same reasoning, and the panel also ruled against Robinhood in its appeal. Separately, on September 16, 2026, a different Ninth Circuit panel ruled in Blue Lake Rancheria v. Kalshi. It held that two California tribes were likely to show Kalshi's sports contracts on tribal lands are class III gaming, the casino-style category that federal law lets tribes control on their land.
If your business lists, markets or clears event contracts, business and corporate lawyers who work with regulated products can check where your contracts may count as gambling, state by state. If you're based in Nevada, you can compare law firms across Nevada that handle this kind of work.
| Question | After the ruling |
|---|---|
| Can Nevada enforce its gaming laws against Kalshi's sports contracts? | Yes, for now. The court order that blocked enforcement is gone. |
| Did the court decide Kalshi's election contracts? | No. The district court must decide that issue first. |
| Is this a final ruling on the merits? | No. It decides only whether Kalshi was likely to win at this early stage. |
| Does it bind courts in every state? | No. It binds federal courts in the Ninth Circuit. The Third Circuit ruled for Kalshi in a New Jersey case. |
| Does a pending CFTC proposal change the result today? | No. The court said a proposed rule has no legal effect, and the current rule controls. |
What the ruling does not settle
The biggest open question is a split between federal appeals courts. In KalshiEX v. Flaherty, the Third Circuit held earlier in 2026 that Kalshi's sports contracts are swaps and that federal law likely preempts New Jersey's gaming laws. The Ninth Circuit expressly disagreed, and Crypto.com has already asked the Supreme Court to take up its case, No. 26-344. According to the opinion, a Fourth Circuit appeal from a Maryland ruling against Kalshi was still pending, and district courts in Tennessee, Ohio, Arizona and New York had reached mixed results.
The CFTC's own position is also moving. Its June 12, 2026 proposal would rewrite section 40.11 and set factors for deciding when event contracts involving gaming are contrary to the public interest. The comment period closed July 27, 2026, and we found no final rule as of September 24, 2026. Kalshi's rehearing petition argues the panel relied on a rule that is about to be replaced. After the decision, a CFTC spokesperson told The Block the court had "misread the statute and regulations" and that the case had "teed up a circuit split that calls out for resolution by the Supreme Court."
If a regulator has already sent your business a cease-and-desist letter, the next step often looks like Kalshi's: a lawsuit asking a court to block enforcement while the legal question is decided. Civil litigation lawyers bring and defend those requests.
What to watch if your business offers event contracts
Keep these dates and filings in view. The appeal docket shows no ruling yet on Kalshi's September 9 request to rehear the case. This is general information, not legal advice, and the answer can differ by state. Our guide to choosing a lawyer lists questions to ask before you hire a lawyer for a dispute with a regulator.
- Rehearing: whether the Ninth Circuit agrees to rehear the case, as Kalshi asked on September 9, 2026. There is no ruling on that request as of September 24, 2026.
- Supreme Court: the Crypto.com petition, No. 26-344, and any petition Kalshi files, given the split with the Third Circuit.
- CFTC rule: whether the agency finalizes its proposed replacement for section 40.11, which the court treated as the controlling rule.
- Remand: how the Nevada district court rules on Kalshi's election contracts.
- Where you operate: which states and tribal lands you serve, and whether you can block users by location where your contracts may count as gambling.
Your questions about the Kalshi Nevada ruling
Is Kalshi gambling?
Under Nevada law, likely yes for its sports contracts, at least for now. The Ninth Circuit said Kalshi's sports event contracts have the hallmarks of sports betting and are likely not swaps under federal law. That is a finding about who is likely to win at an early stage, not a final decision, and the Third Circuit reached the opposite conclusion in a New Jersey case.
Are prediction markets gambling?
The court did not decide that for every prediction market or every contract. It ruled only on Kalshi's sports event contracts, sent the question about its election contracts back to the trial court, and left other kinds of event contracts untouched.
Can Nevada still regulate Kalshi?
Yes, for now. The court order that blocked Nevada is canceled, and the Ninth Circuit affirmed that. Kalshi has asked the court to rehear the case, and the result could change if the full court or the Supreme Court takes it up.
What role does the CFTC play?
The CFTC registers exchanges like Kalshi and has sole control over swaps, the financial contracts traded on them. The court held these sports contracts likely fall outside that power, and that the CFTC's current rule bars listing gaming contracts. The CFTC has proposed replacing that rule and disagrees with the ruling.
Does the ruling apply in every state?
No. It binds federal courts in the Ninth Circuit, which includes Nevada, California and Arizona. The Third Circuit reached the opposite conclusion in a New Jersey case, and other courts are still deciding the question.
Need a lawyer?
Dealing with something like this?
A ruling like this affects people and businesses differently. A lawyer can explain what it means for you, and we can help you find one in Nevada.
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