A U.S. appeals court has handed Kalshi a major setback in Nevada. The ruling strengthens state authority over sports prediction markets. It also deepens a growing legal conflict with federal regulators.
The Ninth Circuit said Kalshi likely cannot use federal law to avoid Nevada’s gaming rules. Consequently, the decision could shape how prediction markets operate across the United States.
Court challenges CFTC’s position
A three-judge Ninth Circuit panel upheld a Nevada court decision involving Kalshi’s sports contracts. The judges found that Nevada could require Kalshi to obtain a gaming license.
However, Kalshi and the Commodity Futures Trading Commission argue federal law gives the agency exclusive authority. The Ninth Circuit rejected that argument at this stage.
Judge Ryan Nelson said sports contracts closely resemble traditional gambling. Additionally, he questioned whether Congress intended financial reforms to override state gambling laws.
Moreover, the ruling creates a conflict with the Third Circuit. That court previously blocked New Jersey from regulating Kalshi’s platform.
Supreme Court fight becomes more likely
The growing split could eventually push the dispute toward the Supreme Court. Meanwhile, several states have secured restrictions against Kalshi’s sports markets.
Nevada, Massachusetts, Michigan and Washington have already won court orders against the platform. Arizona also pursued criminal charges over alleged illegal gambling.
Significantly, the Ninth Circuit returned Kalshi’s election contracts to a Nevada judge for further review. Hence, the ruling could affect more than sports markets as states intensify scrutiny.
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