Ninth Circuit Remands Kalshi Election Contract Preemption Question for District Court Review
TL;DR — The Ninth Circuit upheld Nevada’s ban on Kalshi sports contracts but remanded whether CEA swap status protects its election contracts from state law. The panel cited the district court’s incomplete analysis and created a split with the Third Circuit. Election markets face injunctions, charges and warnings across Washington, Arizona, Minnesota, Wisconsin and New York.
SCCG Take — The remand sustains regulatory uncertainty for political prediction markets. Operators must track the district court’s swap analysis, which will shape preemption arguments in the Ninth Circuit and similar challenges elsewhere.
The Ninth Circuit sided with Nevada on Kalshi sports event contracts but returned the election contracts issue to the district court. A three-judge panel ruled that the Commodity Exchange Act likely does not preempt state gambling laws as applied to the sports markets. The court directed further analysis on whether federal commodities rules shield Kalshi election contracts from Nevada regulation.
Judge Ryan Nelson wrote: “Because the district court did not analyze whether Kalshi’s election contracts, which are illegal under Nevada law and a fraction of Kalshi’s business, fit within the CEA’s definition of swap, we remand for the district court to consider this issue in the first instance.”
Kalshi began offering election event contracts in June 2023. Nevada’s March 2025 cease-and-desist order covered both sports and election markets. The company remains subject to a state court injunction blocking election contracts in Nevada and has geofenced the state.
Separate Legal Test for Election Contracts
The Ninth Circuit confirmed that the CEA expressly preempts state rules on qualifying swaps traded on federally regulated designated contract markets. It upheld U.S. District Judge Andrew Gordon’s November ruling that sports event contracts fall outside that definition. Gordon had not applied the swap analysis to election contracts, so the appeals court instructed him to do so.
The swap definition covers transactions tied to an event or contingency with potential financial, economic or commercial consequence. The panel offered no opinion on whether Kalshi election contracts meet it. The decision creates a circuit split, as the Third Circuit previously sided with Kalshi in parallel New Jersey sports-contract litigation.
The Open Question
Election contracts face parallel scrutiny in multiple states. Washington obtained an injunction, leading Kalshi to restrict access on Aug. 20. Arizona brought criminal charges tied to the 2028 presidential election and 2026 state races, later blocked by federal order. Minnesota’s prohibition prompted a successful CFTC, Kalshi and Polymarket challenge, with U.S. District Judge Katherine Menendez finding likely CEA preemption. The Wisconsin Elections Commission warned in July of potential felony charges for voters using such contracts. New York seeks to bar unlicensed event contracts including those on elections.
As reported by Gambling Insider, the remand leaves Nevada’s ultimate authority over these markets unresolved pending the district court’s swap determination. Operators face continued fragmentation pending that ruling.
Reporting: Gambling Insider
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
The remand keeps political prediction markets in legal limbo while states press enforcement and circuit courts split on CEA preemption.
We've watched operators geofence entire states and pull products mid-cycle. This remand extends that uncertainty — district courts now hold the preemption pen, and every jurisdiction becomes its own fight. Clients building event-contract roadmaps need real-time compliance architecture, not hope that one appellate ruling settles everything. It won't.
- Ninth Circuit upheld Nevada sports ban, remanded election contract swap analysis to district court
- Creates circuit split with Third Circuit; election markets face injunctions in five-plus states
- District court must now decide if CEA swap status shields election contracts from state law
SCCG angle: SCCG connects operators to regulatory counsel and compliance architects who've managed real-time geofencing, state attorney general dialogue, and CEA preemption strategy across the Third and Ninth Circuits. We help clients build defensible product roadmaps while district court analysis unfolds, leveraging our network of federal and state regulatory advisors who understand where the next enforcement wave is forming.
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