Appeals Court Affirms Nevada’s Right to Oversee Kalshi Prediction Markets
TL;DR — In a 3-0 decision, the Ninth U.S. Circuit Court of Appeals determined the Commodity Exchange Act likely did not pre-empt Nevada Gaming Commission regulations as applied to sports event contracts. The decision creates a split with the Third U.S. Circuit Court of Appeals, which in April ruled 2-1 that New Jersey could not regulate Kalshi’s platform. The ruling increases the chances that the Supreme Court may choose to decide.
SCCG Take — States can enforce licensing on prediction platforms framed as sports betting. Operators face compliance pressure and enforcement exposure until the Supreme Court resolves the jurisdictional divide.
A federal appeals court has ruled that Kalshi cannot block Nevada gaming regulators from overseeing sports event contracts on its prediction market platform.
In a 3-0 decision issued Friday, the Ninth U.S. Circuit Court of Appeals held that the Commodity Exchange Act likely does not preempt Nevada Gaming Commission regulations applied to these contracts. The panel found that U.S. District Court Judge Andrew Gordon properly dissolved the preliminary injunction, as Kalshi showed no likelihood that federal law overrides state gaming rules here.
Kalshi contended that the Commodity Futures Trading Commission holds exclusive jurisdiction. The court disagreed, classifying the products as sports bets rather than swaps subject solely to federal oversight.
Legal Distinctions in the Opinion
Judge Ryan Nelson wrote that the CEA, as amended by Dodd-Frank, grants the CFTC exclusive jurisdiction over swaps. Yet these sports event contracts fall outside that definition because they qualify as sports bets. The opinion cites 17 C.F.R. 40.11(a), which bars swaps referencing gaming, terrorism or similar activities. The panel also ruled it could determine swap status without triggering Administrative Procedure Act review.
The decision conflicts with the Third U.S. Circuit Court of Appeals 2-1 ruling in April that barred New Jersey from regulating Kalshi. New Jersey has until September 3 to seek Supreme Court review. This split heightens the odds the high court will resolve whether states or the CFTC controls these contracts.
Prospects for Higher Court Resolution
As reported by CDC Gaming, Mike Dreitzer, chairman of the Nevada Gaming Control Board, said the outcome “completely vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state. We will continue to vigorously enforce Nevada law to safeguard gaming in our state.”
A Kalshi spokeswoman confirmed the company would “be seeking further review,” adding 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, like Kalshi. Despite the Ninth Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations.”
Bill Miller, president and CEO of the American Gaming Association, called it “a significant win for consumer protections and taxpayers. It is a big loss for Kalshi and other backdoor sports gambling operations who defy state law.”
The conflicting precedents expose prediction market operators to fragmented enforcement risk. States retain strong tools to treat these contracts as sports betting subject to licensing, while federal clarification remains pending.
Reporting: CDC Gaming
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
States can enforce licensing on prediction platforms framed as sports betting until the Supreme Court settles the jurisdictional fight.
We've guided operators through every regulated market for three decades, and this circuit split changes compliance overnight. If you're running prediction markets or event contracts, you now face conflicting rules coast to coast. SCCG helps partners navigate the patchwork until clarity arrives — licensing, state strategy, and regulatory positioning across every jurisdiction.
- Ninth Circuit ruled 3-0 that Nevada can regulate Kalshi's sports event contracts under state gaming law
- Decision splits with Third Circuit, which barred New Jersey from regulating Kalshi in April
- Supreme Court review now likely as states and CFTC battle over prediction market jurisdiction
SCCG angle: SCCG connects platforms to state gaming counsel, licensing specialists, and regulatory advisors in Nevada, New Jersey, and every regulated jurisdiction. We help clients build compliance strategies that work under conflicting precedent — protecting market access while the Supreme Court decides who's in charge.
Gaming, betting and prediction markets — the desk’s read, every weekday.
Subscribe →