Ninth Circuit says Nevada can regulate Kalshi's sports contracts, splitting with an earlier ruling and pointing toward the Supreme Court

A federal appeals court has handed Kalshi a defeat in its fight to keep state gambling regulators out of its business, ruling that Nevada's gaming laws likely apply to the company's sports event contracts and that federal commodities law does not shield them.

On Friday, August 28, a panel of the U.S. Court of Appeals for the Ninth Circuit upheld a lower court's decision to dissolve a preliminary injunction that had protected Kalshi from Nevada enforcement, according to The Block and CoinDesk, both citing the opinion. "We conclude that Kalshi has not shown a likelihood that the CEA preempts state gaming regulations as applied to its sports event contracts and that the district court did not abuse its discretion by dissolving the injunction," the court wrote. The CEA is the Commodity Exchange Act, the statute that underpins the Commodity Futures Trading Commission's authority and the foundation of Kalshi's claim that only its federal regulator can govern it.

How the case got here

The dispute traces to 2025, when the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter demanding it stop offering election and sports event contracts in the state and threatening criminal or civil charges, per The Block. Kalshi sued the board and the state and won a preliminary injunction blocking Nevada from regulating its sports and election contracts. A district court later dissolved that injunction — a reversal that followed a separate ruling against Crypto.com, according to The Block — and the Ninth Circuit has now affirmed the dissolution.

The core of the ruling turns on a definition. Kalshi argues its contracts are "swaps," derivatives that fall squarely under the CFTC's jurisdiction. The panel disagreed. "The panel concluded that the CEA likely does not preempt Nevada's gaming regulations as applied to Kalshi's sports event contracts," the opinion said, per both outlets. CoinDesk quoted the court's reasoning more bluntly: the sports event contracts "were not 'swaps' because they were sports bets."

A split between courts

The ruling does not settle the question — it sharpens the conflict. In April, a federal court reached the opposite conclusion, telling New Jersey it had no business regulating Kalshi, CoinDesk reported. Kalshi's own spokesperson framed that earlier decision as a Third Circuit ruling. With two federal appeals courts now pointing in opposite directions, both the CFTC and Kalshi say the matter is likely headed to the Supreme Court.

The accounts differ on one procedural detail: CoinDesk describes Friday's decision as "unanimous," while The Block refers to "three of the appeals judges" addressing the jurisdiction question, consistent with a standard three-judge panel. The outlets also quote the CFTC's spokesman slightly differently — CoinDesk has him calling the ruling an "atextual exception" to the CEA, while The Block renders it "textual exception," which appears to be a transcription slip given the context.

Key facts

• The Ninth Circuit ruled against Kalshi on Friday, August 28, 2026, affirming the dissolution of a preliminary injunction (The Block, CoinDesk, citing the opinion).
• The court held the CEA "likely does not preempt Nevada's gaming regulations as applied to Kalshi's sports event contracts" (both outlets, quoting the opinion).
• The panel found the contracts "were not 'swaps' because they were sports bets" (CoinDesk, quoting the opinion).
• Nevada's cease-and-desist letter to Kalshi dates to 2025; the district court first granted, then dissolved, Kalshi's injunction, the dissolution following a ruling against Crypto.com (The Block).
• In April, a separate federal court ruled New Jersey could not regulate Kalshi — the opposite outcome, creating a circuit split (CoinDesk).
• Kalshi had already withdrawn from Nevada and other jurisdictions in response to local orders (CoinDesk).
• Connecticut filed a new lawsuit against prediction-market operators earlier that week; the CFTC has its own suits asserting sole jurisdiction and has proposed a regulatory framework (both outlets).
• CFTC Chair Michael Selig has claimed the agency has "exclusive jurisdiction" over prediction markets, including sports contracts (The Block).

The real-world read

The loudest voices reacting to this ruling all have a stake in the outcome, and their framing should be read accordingly.

The CFTC, through spokesman Zach Fulton, called the decision an error and said the court "invented a new and atextual exception to the CEA," noting the statute's only carve-outs are "onions and movie box office receipts." That is a real and colorful legal argument — but the CFTC is not a neutral observer here. It is itself a litigant, suing states to establish the very "exclusive jurisdiction" the Ninth Circuit just declined to recognize. Its characterization of the loss as merely "teed up a circuit split that calls out for resolution by the Supreme Court" is the spin of a party that lost this round and would prefer to skip to the next.

Kalshi's response is a study in selective emphasis. Spokesperson Dani Lever highlighted that "the Ninth Circuit agreed with the Third Circuit on a fundamental point: Federal law prevents states from regulating trading on a federally licensed exchange." Whatever the merits of that point, it sits alongside the ruling's central holding — which went against Kalshi. The company also said it "will be seeking further review" and pointed to the CFTC "working to clarify" its regulations, effectively arguing that the rules it lost under are about to change in its favor. That is an argument about the future, not the decision handed down Friday.

On the other side, the American Gaming Association — the trade group for casinos and licensed sportsbooks — called the ruling "a significant win for consumer protections and taxpayers" and "a big loss for Kalshi and other backdoor sports gambling operations." The AGA's members are the direct commercial rivals of prediction markets competing for the same wagering dollars. Its language about consumer protection sits on top of a plain competitive interest, and should be weighed as the statement of an interested party. Nevada Gaming Control Board Chairman Mike Dreitzer's claim that the ruling "completely vindicates what we have been saying all along" is the regulator declaring victory in its own case.

One practical point cuts through the noise: Kalshi had already pulled out of Nevada. The immediate stakes in this specific state are limited; what matters is the precedent and the widening split that raises the odds of a Supreme Court showdown over whether an event contract on a game's outcome is a federally regulated derivative or a bet the states get to police.

Opinion, and whose

• The CFTC (via Fulton) contends the Ninth Circuit misread the statute and that a swap is a swap regardless of subject matter — a legal position, not a settled fact.
• Kalshi (via Lever) predicts it will prevail on further review and that CFTC rule changes will favor it — a forecast from an interested party.
• The AGA and the Nevada board frame the decision as a win for consumers and states — the views of Kalshi's competitors and its regulatory adversary, respectively.
• Both The Block and CoinDesk assess that the resulting circuit split makes Supreme Court review more likely — analysis, not a certainty.

Sources

• The Block (Sarah Wynn), "Ninth Circuit deals blow to Kalshi in Nevada sports betting fight," Aug. 28, 2026 — the ruling's language, the 2025 cease-and-desist and injunction history, the Crypto.com-linked dissolution, CFTC Chair Selig's "exclusive jurisdiction" claim, and the Fulton and Lever statements. Disclosure: The Block reports that Foresight Ventures, a crypto investor, is its majority owner as of November 2023.
• CoinDesk (policy desk), "Kalshi takes legal blow in court ruling confirming state powers over prediction markets," Aug. 28, 2026 — the "unanimous" characterization, the "not 'swaps' because they were sports bets" quote, the April New Jersey/Third Circuit ruling and circuit split, Kalshi's withdrawal from Nevada, the Connecticut suit, and the Dreitzer and American Gaming Association statements.

No paid or sponsored material was used in this report; the AGA and CFTC statements are quoted as the positions of interested parties, not as neutral sources.

This is news reporting, not financial or legal advice.