A second appeals court calls Kalshi's sports contracts gambling
The Ninth Circuit holds that the Commodity Exchange Act likely does not preempt Nevada's gaming law, contradicting the Third Circuit and leaving the same contract lawful in one part of the country and not another.
What happened
In KalshiEX, LLC v. Assad, No. 25-7516, decided on 28 August, a Ninth Circuit panel affirmed the dissolution of the preliminary injunction Kalshi had won against Nevada's gaming regulators, holding that 'the CEA likely does not preempt Nevada's gaming regulations as applied to Kalshi's sports event contracts'. Judge Ryan D. Nelson wrote for the panel, joined by Judge Bridget S. Bade, with Judge Kenneth K. Lee concurring; there was no dissent. The opinion puts the point plainly: '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.'
Why it matters
The same contract is now lawful in one part of the country and not in another. The Third Circuit ruled for Kalshi in April on the same preemption question, and two federal appeals courts holding opposite views of whether a CFTC-registered event contract displaces state gambling law is the condition the Supreme Court exists to resolve. It matters beyond Kalshi, because the whole US prediction-market build rests on the premise that federal registration is the only licence a venue needs. If it is not, the sector's addressable market is drawn state by state rather than nationally, and the question of what an event contract is stops being a definitional argument and becomes a map.
What is not settled
A split invites review; it does not obtain it. PYMNTS and Bitcoin.com News both report a 3 September deadline for New Jersey to petition the Supreme Court in the related Flaherty v. KalshiEX, and treat this ruling as making that petition likelier, but no petition had been granted when this was written. The opinion also decides a preliminary-injunction appeal on a likelihood standard rather than the merits, so what it settles is narrower than the language suggests. The CFTC's own position, that a contract structured as a swap remains a swap whatever it references, is untouched by the ruling and unreconciled with it.
Institutions in this story
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Kalshi
Exchange
Lost the appeal. The panel affirmed dissolution of the injunction it had won against Nevada's regulators, holding the Commodity Exchange Act likely does not preempt state gaming law as applied to its sports event contracts.
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Commodity Futures Trading Commission
Regulator
Registered the exchange whose contracts a second appeals court has now called gambling. Its position that a contract structured as a swap remains a swap is neither adopted nor addressed by the ruling.
On the record
The Ninth Circuit holds Kalshi's sports contracts are not preempted by the CEA
In KalshiEX, LLC v. Assad, No. 25-7516, decided 28 August 2026, a Ninth Circuit panel affirmed dissolution of Kalshi's injunction against Nevada's gaming regulators, holding the Commodity Exchange Act likely does not preempt state gaming law as applied to its sports event contracts. Nelson wrote, Bade joined, Lee concurred. It contradicts an April Third Circuit decision, creating a split.