Ninth Circuit Backs Nevada’s Authority Over Sports Prediction Markets

Kalshi is registered with the Commodity Futures Trading Commission as a designated contract market. It argued that its sports-event contracts were swaps under the Commodity Exchange Act and therefore subject to the CFTC’s exclusive jurisdiction, preventing Nevada from applying its gambling rules.

The Ninth Circuit rejected that reading. It held that sports bets did not become swaps merely because they were traded on a federally regulated market. In the panel’s view, the outcome of an ordinary sporting event was not associated with a potential financial, economic or commercial consequence in the way required by the statutory definition of a swap.

The court also relied on the existing CFTC regulation that bars contracts involving gaming. It rejected Kalshi’s express, conflict and field preemption theories, finding that federal derivatives oversight and Nevada’s regulation of wagering could operate without an unavoidable legal conflict.

That interpretation, the panel noted, would displace a multibillion-dollar field historically supervised by state and tribal authorities without congressional direction.
The opinion states that more than 90% of Kalshi’s trades in 2025, representing 95% of its revenue, were sports-related.

The decision places the Ninth Circuit in direct tension with the Third Circuit, which affirmed preliminary relief for Kalshi in its New Jersey dispute and treated comparable sports contracts as federally protected swaps. The Ninth Circuit expressly declined to follow that broader interpretation.

The disagreement matters well beyond the two cases. Platforms offering one product can now face materially different legal treatment depending on the state and appellate circuit. District courts have already reached varied results, while another appeal remains pending in the Fourth Circuit. The split increases the prospect of further appellate review.

The Nevada ruling also follows an August decision in which a Utah court upheld state gambling laws against Kalshi, rejecting similar federal preemption arguments. For operators, the expanding body of conflicting judgments makes a single nationwide compliance assumption increasingly difficult to defend.

The Nevada Gaming Control Board said the 3-0 ruling confirmed that sports-event contracts constitute gambling and must comply with the state’s licensing framework. Nevada classifies the offering of such contracts as wagering activity and maintains that entities providing them must hold a state gaming licence.

The appellate judgment follows an earlier Nevada decision that kept Kalshi blocked in parallel state proceedings. The regulatory direction now places greater pressure on prediction-market operators to review state-specific licensing exposure, geolocation controls, marketing language, consumer safeguards and the availability of individual contract types.

For B2B suppliers, the implications extend to payments, identity verification, data feeds, affiliate campaigns and technology contracts. Commercial agreements may need clearer provisions covering restricted jurisdictions, regulatory change and the withdrawal of products following enforcement action.

The judgment applies the statute and CFTC regulation currently in force. Meanwhile, the CFTC’s proposed prediction-market framework seeks to clarify how gaming and sports contracts should be treated at the federal level.

Any final rule could influence future litigation, but it would not automatically erase the Ninth Circuit’s reasoning or Nevada’s present enforcement authority. Businesses should therefore map compliance by contract type, state and appellate circuit rather than treating CFTC registration as a complete substitute for state gaming analysis. Election contracts require separate attention because the Ninth Circuit remanded that part of Nevada’s challenge to the district court.