Ninth Circuit Rejects Kalshi Preemption Argument in Sports Contracts Dispute, Lifting Polymarket Odds of Supreme Court Review to 52 Percent
TL;DR — Ninth Circuit unanimously held CEA does not preempt Nevada gaming rules on Kalshi sports contracts, creating circuit split with Third Circuit. Polymarket odds of Supreme Court review jumped to 52% with nearly $1M traded. Experts split: 70-80% chance of ruling against markets versus 50-50 assessment.
SCCG Take — The circuit split accelerates Supreme Court prospects and forces operators to weigh continued state-level blocks against potential CFTC-backed national clarity. New Jersey’s September 3 petition deadline will signal whether review occurs on preliminary rulings or awaits final judgments.
The Ninth Circuit unanimously ruled against Kalshi Friday, holding that the Commodity Exchange Act does not preempt Nevada gaming regulations as applied to the operator’s sports event contracts. The decision directly conflicts with the Third Circuit‘s earlier ruling favoring Kalshi, deepening a circuit split that now makes Supreme Court review more likely.
Polymarket responded by listing a contract on whether the Supreme Court will accept the case. Odds rose from 29 percent to 52 percent after the ruling, with almost $1 million traded. Bettors assign only a 6 percent chance the court grants review before October 31, according to reporting by Casino Beats.
CEA Preemption Limits and Remaining Statutory Ambiguity
The three-judge panel concluded the CEA likely does not override state gambling laws for these contracts. One author of the Dodd-Frank Act, Sen. Chris Dodd, previously confirmed Congress did not intend the 2010 amendments to permit sports markets. The ruling stated: “The panel concluded that the CEA likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts.”
Judge Kenneth Kiyul Lee highlighted ambiguity in the CEA’s Special Rule, which gives the CFTC discretion to determine whether certain gaming contracts are contrary to the public interest. CFTC spokesperson Zach Fulton countered that the Ninth Circuit misread the statute and that the case is “now teed up a circuit split that calls out for resolution by the Supreme Court.” Kalshi spokesperson Dani Lever said the company will seek further review. New Jersey has until September 3 to petition for review of the Third Circuit decision.
Split Predictions on Supreme Court Action and Ultimate Ruling
Legal experts differ on the prospects. Gaming lawyer Daniel Wallach assigns a 70-80 percent chance the Supreme Court rules against prediction markets and warned the Ninth Circuit opinion could “doom the CFTC’s future rulemaking on sports-event contracts.” Law professor Melinda Roth assesses the odds at 50-50, noting the court’s composition could change before arguments, which remain at least a year away.
Former CFTC regulator Carl Kennedy observed that “given the conflict and broader implications for prediction-market regulation, Supreme Court review is now substantially more plausible,” though he cautioned the current rulings rest on preliminary judgments and the court may prefer a fully developed record.
The split decisions, combined state opposition, and CFTC support leave operators facing continued blocks in Michigan, Washington, and Nevada. Resolution timing remains uncertain, yet the financial stakes for licensed prediction platforms continue to grow with each conflicting appellate outcome.
Reporting: Casino Beats
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
The circuit split is real, review odds are climbing, and event-contract operators now face prolonged state-by-state uncertainty until SCOTUS weighs in.
We have partners on both sides of this fight — exchanges pushing for CFTC clarity and state regulators defending their turf. The Ninth Circuit ruling confirms what we have been telling clients: event contracts sit in a regulatory gray zone, and the CEA preemption question will not resolve cleanly without the Supreme Court stepping in.
- Ninth Circuit unanimously ruled CEA does not preempt Nevada gaming rules on Kalshi sports contracts
- Creates direct conflict with Third Circuit; Polymarket traders now price 52% chance of Supreme Court review
- New Jersey petition deadline is September 3; CFTC says statute was misread and split demands high court resolution
SCCG angle: SCCG advises operators and regulators caught in this split every day. We connect exchanges to compliance counsel in every circuit, help state agencies assess exposure to federal preemption claims, and broker dialogue between CFTC-licensed platforms and state gaming bodies before litigation starts. This ruling does not end the fight — it reshapes the map our clients navigate.
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