Ninth Circuit Backs State Gambling Laws on Kalshi Sports Contracts While Arizona Election Case Remains Open
TL;DR — The Ninth Circuit held that the Commodity Exchange Act does not preempt state gambling laws on Kalshi sports contracts, supporting Arizona AG Kris Mayes. The ruling leaves election wagering questions remanded to district court and does not affect a federal preemption block on Arizona charges. Prediction platforms face continued mixed regulatory signals across the circuit.
SCCG Take — State regulators gain precedent on sports contracts, yet federal litigation and unresolved election issues signal protracted uncertainty that operators must price into compliance planning.
The U.S. Ninth Circuit Court of Appeals ruled that the federal Commodity Exchange Act does not bar states from enforcing their gambling laws against Kalshi’s online sports-event contracts. The decision upholds a lower court order allowing Nevada to apply its sports betting regulations to the prediction market operator. Arizona Attorney General Kris Mayes is reviewing the outcome for its bearing on her state’s parallel efforts.
Kris Mayes described the ruling as affirmation of long-standing state and tribal oversight. “Kalshi’s position would have effectively federalized sports betting regulation nationwide and swept aside decades of state and tribal oversight built to protect consumers from the real harms of unregulated gambling,” she said. Kalshi had argued its sporting-event trades constitute CFTC-regulated swaps immune from state gambling statutes. The Ninth Circuit rejected that view.
Arizona’s Criminal Action and Federal Preemption Ruling
The sports-contract decision carries direct weight in Arizona, which sits in the Ninth Circuit. Kris Mayes filed a 20-count criminal information against Kalshi in March, charging the New York company with operating an illegal gambling business and violating state election wagering prohibitions. It was the first criminal case brought by any U.S. state against the operator. Kalshi called the charges “paper-thin arguments” and insisted its platform should not face a patchwork of state laws.
U.S. District Judge Michael Liburdi blocked the prosecution in May. Liburdi held that Kalshi operates as a CFTC-designated contract market and that federal law preempts Arizona’s gambling statutes. The Ninth Circuit’s sports ruling does not disturb Liburdi’s order on the election-related counts, which were sent back to the district court.
Federal Challenge and Remaining Uncertainty
In April the U.S. government sued Arizona, Connecticut and Illinois, asserting that event-contract oversight belongs exclusively to the CFTC. As reported by Yogonet International, the Ninth Circuit decision strengthens the state’s hand on sports contracts but leaves the larger election-dispute framework unresolved. Operators and regulators now face a split legal landscape that invites further litigation before clearer market boundaries emerge.
Reporting: Yogonet International
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
States won a round on sports contracts, but federal preemption litigation and election-wagering uncertainty mean compliance chaos continues for prediction platforms.
We track every regulated and emerging vertical, and prediction markets sit at a messy three-way intersection — state gambling law, federal commodities oversight, tribal compacts. The Ninth Circuit just handed state AGs a precedent, but the federal preemption suit and Arizona's open election case mean operators face years of contradictory rules across circuits.
- Ninth Circuit: CEA does not preempt state gambling laws on Kalshi sports contracts
- Arizona's 20-count criminal case remains partially blocked by federal preemption ruling
- Federal lawsuit against Arizona, Connecticut, Illinois asserts exclusive CFTC jurisdiction over event contracts
SCCG angle: SCCG works both sides of this divide — we advise tribal and state regulators on compliance frameworks and connect prediction platforms to the legal, lobbying, and compliance partners who can navigate split-circuit precedent. If you're building or licensing event contracts, we bring the network that knows which states will fight and which doors stay open.
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