Kalshi Bolsters Ninth Circuit Team Ahead of Rehearing Deadline as New Jersey Cert Petition Reaches Supreme Court

Kalshi has added appellate counsel in its Ninth Circuit litigation days before the deadline to seek rehearing of an adverse August 28 ruling on sports-event contracts. The moves, as reported by Gambling Insider, come as New Jersey’s petition for certiorari on the resulting circuit split has been docketed at the Supreme Court.

Several additional Milbank attorneys entered appearances for Kalshi on September 8 in the case against Nevada regulators. The Ninth Circuit panel held that Kalshi failed to show likelihood of success on its Commodity Exchange Act preemption argument. It ruled that the sports contracts at issue are not “swaps” under the CEA, removing the foundation for federal preemption of state gaming laws.

This directly conflicts with the Third Circuit’s earlier holding in Kalshi’s New Jersey matter. That court found the contracts qualify as swaps on a designated contract market and that Kalshi was likely to succeed on its preemption claim against state regulation. The Ninth Circuit considered and rejected the Third Circuit’s interpretation, producing a clean split on the same federal statutory scheme involving the same company and product.

Gaming-law attorney Daniel Wallach flagged the new appearances and suggested Kalshi “may be filing a petition for rehearing en banc in the Ninth Circuit instead of seeking cert from SCOTUS.” The Supreme Court docketed New Jersey’s petition in Flaherty v. KalshiEX, LLC as Case No. 26-299. Kalshi’s response is due October 8, along with amicus briefs supporting New Jersey.

Strategic Alignment From the Circuit Split

The timing gives Kalshi the option to attack its Ninth Circuit loss through en banc rehearing while playing defense in Washington on the case it won below. An en banc petition would allow Kalshi to argue that conflicting federal law now governs a nationwide market, an institutional concern that fits Federal Rule of Appellate Procedure 35. Success could eliminate or narrow the adverse precedent across the western United States and potentially resolve the split.

Yet risks remain specific to this posture. The Ninth Circuit could deny rehearing outright or grant it and produce a broader en banc opinion reinforcing Nevada’s authority with more judicial weight. Both the Nevada and New Jersey cases arose from preliminary-injunction proceedings rather than final merits judgments, a limitation that could counsel the Supreme Court to await further development regardless of the split.

Forward Path for Event Contract Clarity

Kalshi no longer needs to manufacture a vehicle to the Supreme Court because New Jersey has supplied one. This alignment lets the company focus first on erasing its Ninth Circuit setback. The outcome will shape not only Kalshi’s operations but the regulatory exposure for all CFTC-approved event contracts traded across state lines.

Reporting: Gambling Insider

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