Ninth Circuit Upholds Nevada Gambling Rules on Kalshi Event Contracts
TL;DR — Ninth Circuit upheld Nevada’s regulation of Kalshi sports contracts as gambling in 3-0 ruling, rejecting swap claims under Commodity Exchange Act. Decision conflicts with Third Circuit precedent on CFTC jurisdiction, opening path to SCOTUS review. Kalshi may seek en banc rehearing or certiorari petition.
SCCG Take — The appellate divide forces operators to navigate inconsistent state and federal rules on prediction products. SCOTUS intervention would clarify whether these platforms operate as commodities or gambling, directly affecting compliance costs and market access.
The Ninth Circuit Court of Appeals upheld Nevada’s authority to treat Kalshi’s sports event contracts as gambling. In a unanimous 3-0 ruling, the court rejected Kalshi’s claim that the products are swaps protected from state oversight by the Commodity Exchange Act. The decision widens a split among federal appeals courts and sets the stage for possible Supreme Court review.
Court Rejects Form-over-Substance Defense
The 50-page opinion applies a direct test to the contracts. Judge Ryan Nelson wrote: “The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps. Just as ‘[t]hat which we call a rose by any other name would smell as sweet,’ placing sports bets, even when called by another name, is still gambling.”
Nelson spelled out the practical overlap. Kalshi users can place prop bets, bet the point spread, bet a specific score, or create a several-leg parlay. The payout depends on the performance of a sports team or a player. He concluded that the CFTC is not a gambling regulator. The panel emphasized that labels do not change the underlying activity.
Circuit Split Opens Door to Supreme Court
The Ninth Circuit reached the opposite conclusion from the Third Circuit in the New Jersey case KalshiEX LLC v. Flaherty, which placed the contracts under CFTC jurisdiction rather than state gambling law. As reported by iGaming Future, this conflict increases the chance that the Supreme Court will accept review.
Kalshi holds two immediate procedural options. It may file a petition for writ of certiorari with the Supreme Court. It may also request a rehearing en banc before an 11-judge Ninth Circuit panel. New Jersey has until September 3 to file its own petition in the parallel matter.
The split leaves prediction market operators without uniform national treatment. Regulators and licensees must track which jurisdictions follow the Ninth Circuit’s gambling analysis and which adopt the Third Circuit’s commodities framing. The next filings will determine whether the Supreme Court resolves the classification question.
Reporting: iGaming Future
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
The circuit split forces prediction platforms to navigate two conflicting rulebooks until the Supreme Court picks one.
We track every regulated jurisdiction for our partners launching prediction and event-contract products. This split means compliance roadmaps now fork at the circuit level—what flies under CFTC cover in one appeals region gets tagged as gambling in another. Operators need state-by-state strategies until SCOTUS weighs in.
- Ninth Circuit: Kalshi sports contracts are gambling, not CFTC-protected swaps—unanimous 3-0
- Third Circuit ruled opposite in New Jersey case, creating direct appellate conflict
- Kalshi can seek en banc rehearing or certiorari; NJ petition due Sept 3
SCCG angle: SCCG helps prediction and event-contract clients map which states follow Ninth Circuit gambling analysis versus Third Circuit commodities treatment. We connect platforms to tribal, state, and federal regulatory counsel in each circuit, and to tech providers who can toggle product features by jurisdiction until the Supreme Court settles the question.
Gaming, betting and prediction markets — the desk’s read, every weekday.
Subscribe →