Ninth Circuit Denies Kalshi Rehearing Petition Upholding Nevada Ban on Sports Event Contracts
The Ninth Circuit denied Kalshi’s rehearing petition, upholding Nevada’s ban on its sports event contracts. Kalshi has 90 days to seek Supreme Court review amid a circuit split on CFTC preemption of state gaming laws. This coincides with CFTC proposed rules on event contracts, with comments due November 18.
SCCG Take — Prediction market operators face continued state-level barriers despite CFTC oversight, making Supreme Court resolution or finalized federal rules essential before broader rollout.
The U.S. Court of Appeals for the Ninth Circuit denied Kalshi’s petition for a panel rehearing and rehearing en banc. The panel rejected the request unanimously on Wednesday, with no judge requesting a vote for full-court review, as reported by CDC Gaming.
The decision upholds the dissolution of a preliminary injunction against Nevada gaming regulators. Sports event contracts on Kalshi’s platform remain subject to the state ban, as the court ruled they do not meet the definition of a swap under federal law and receive no protection from state gambling prohibitions.
Kalshi’s Arguments and the Circuit Split
Kalshi, represented by Paul Clement, filed a 78-page petition arguing the Ninth Circuit mischaracterized its sports event contracts as sports betting. The petition highlighted a growing circuit court split on whether federal derivatives regulation under the Dodd-Frank Act and the Commodity Exchange Act displaces state and tribal gaming laws for prediction market contracts, especially those involving sports.
The brief stated: “The panel held that, although Congress granted the (CFTC) ‘exclusive jurisdiction’ over instruments traded on federally designated contract markets (DCMs), like Kalshi, state may nonetheless regulate sports-event contracts the CFTC has permitted to be traded on Kalshi.” It added: “As a result, Kalshi now stands exposed to civil and criminal liability, even though it is abiding by federal law and the mandate of its exclusive federal regulator.”
Next Steps and CFTC Rulemaking
Kalshi now has 90 days to file a petition for writ of certiorari with the U.S. Supreme Court. Clement may seek to coordinate with pending Third Circuit litigation already filed at the high court or delay review until the Commodity Futures Trading Commission completes its rulemaking.
On October 9, the CFTC issued a Notice of Proposed Rulemaking and companion Interim Final Rule to clarify jurisdiction over event contracts, including sports-event contracts on prediction markets. Public comments are due by November 18. The denial leaves Kalshi without federal court protection from state enforcement in Nevada while these parallel tracks advance.
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