Ninth Circuit Rejects Kalshi Rehearing Bid, Leaving Nevada Free to Enforce Gambling Laws on Prediction Contracts
The Ninth Circuit denied Kalshi's rehearing and en banc petitions, upholding its August ruling that Nevada may enforce gambling laws against the operator's sports event contracts. Kalshi has until February 2, 2027 to petition the Supreme Court amid conflicting circuit decisions on CEA preemption. A parallel CFTC rulemaking on event contracts could influence next steps.
SCCG Take — This ruling bolsters state regulators in the Ninth Circuit and heightens enforcement risk for prediction platforms until the Supreme Court or final CFTC rules clarify federal preemption. Operators must weigh litigation exposure against product design adjustments.
The U.S. Court of Appeals for the Ninth Circuit denied Kalshi's requests for a panel rehearing and rehearing en banc. The move leaves in place the court's August 28 ruling that dissolved a preliminary injunction shielding the prediction market operator from Nevada gaming enforcement. Kalshi's sports event contracts are now subject to state gambling restrictions.
Details of the Ninth Circuit Order
The court stated that "The full court has been advised of the petition for rehearing en banc, and no judge has requested a vote on whether to rehear the matter en banc." The original three-judge panel had unanimously rejected the petitions. No new analysis of the underlying dispute appears in Wednesday's order.
That August decision held that Kalshi failed to show the Commodity Exchange Act (CEA) likely bars Nevada from applying its gaming laws. The contracts do not qualify as swaps under the CEA, according to the ruling. As reported by Yogonet International, this leaves Kalshi exposed to civil and criminal liability despite its federal registration. "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," the company's 78-page rehearing petition argued.
Next Steps and Federal-State Tension
Kalshi, represented by attorney Paul Clement, generally has 90 days from the denial to file a petition for writ of certiorari with the U.S. Supreme Court. The deadline falls on February 2, 2027, unless extended. The company may coordinate with pending New Jersey litigation before the Third Circuit, which ruled in Kalshi's favor and now faces its own Supreme Court review request.
Conflicting appellate outcomes have sharpened the dispute over whether Dodd-Frank Act and CEA derivatives rules preempt state and tribal gambling laws on sports-tied prediction contracts. A separate Second Circuit order on Tuesday denied injunctions pending appeal in Kalshi's New York and Connecticut matters, plus a Coinbase case there. Those appeals continue without resolving the preemption question.
The timing of any Supreme Court filing could shift based on a CFTC rulemaking. On October 9, the agency released a Notice of Proposed Rulemaking and Interim Final Rule on event contract jurisdiction, including sports contracts on prediction markets. Comments are due by November 18. Kalshi's team may push to await final rules before higher-court review.
A Supreme Court petition would not guarantee acceptance or halt state enforcement in the interim. The August precedent binds federal courts across the Ninth Circuit, which includes California and eight other states, but does not impose an automatic nationwide ban.
Gaming, betting and prediction markets — the desk’s read, every weekday.
Subscribe →