What's happened
The Ninth Circuit has ruled Kalshi’s sports event contracts are not swaps under federal law, upholding Nevada’s gambling authority and signaling a circuit split that could reach the Supreme Court. The decision blocks Kalshi’s operations in Nevada while the litigation continues, with about 20 states involved in similar challenges across the country.
What's behind the headline?
What this means for readers
- A circuit split means higher court review is likely, potentially reaching the Supreme Court.
- States are asserting traditional gambling regulation over new market models, while the CFTC argues for federal jurisdiction.
- The ruling affects markets run by Kalshi, Crypto.com, and others, and could influence the regulatory landscape for prediction markets in at least 20 states.
What to watch next
- Which contract types Kalshi and rivals can legally offer in different states, and whether federal pre-emption will prevail.
- How the Supreme Court might resolve jurisdiction disputes between state gambling laws and federal regulation of swaps.
- Market reactions, including equity moves for operators and potential shifts in public interest.
How we got here
Kalshi operates prediction markets and has faced state-level challenges arguing its contracts are gambling and should be regulated by state gaming authorities. The Ninth Circuit’s ruling follows a Philadelphia-based Third Circuit decision that Kalshi’s sports event contracts are swaps under the Commodity Exchange Act, creating a split among the circuits. The case hinges on whether prediction market contracts are swaps under federal law or subject to state gambling regulations.
Our analysis
The New York Times Business reports that the Ninth Circuit has created a circuit split by ruling sports event contracts are not swaps under the Commodity Exchange Act, despite a earlier Third Circuit decision. AP News confirms the panel’s position and notes roughly 20 states are involved in litigation over prediction markets. CNBC provides additional market context, including stock moves for DraftKings and Flutter Entertainment. The reporting underscores ongoing regulatory tension between state gaming laws and the federal CFTC framework.
Go deeper
- Will Kalshi resume operations in other states as litigation continues?
- How will the Supreme Court resolve the circuit split on federal vs. state regulation?
More on these topics
-
Commodity Futures Trading Commission (CFTC) - Agency
The Commodity Futures Trading Commission is an independent agency of the US government created in 1974, that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
-
Kalshi - American prediction market platform
Kalshi Inc. is a prediction market platform based in Manhattan, New York City, that launched in July 2021. The platform is used primarily for sports betting, which constitutes more than 90% of site activity and 89% of revenue in 2025. Analysts describe activity on the platform as "heavily tied to the sports calendar". Individuals can place bets on other future outcomes, including economic indicators, weather patterns, awards, political and legislative outcomes, and military conflicts. The site has been involved in several controversies and lawsuits regarding the legality of its sports and election markets, the ethics of allowing wagers on sensitive geopolitical issues, and insider trading involving politicians. Concerns over election integrity and declining public trust in the democratic process caused by election betting have been raised by consumer advocacy groups and politicians. As a result, the United States Senate banned its senators and their staff from betting on prediction markets such as Kalshi in May 2026. According to the site, there are 2.9 unprofitable users for each profitable one. John M. Sides has challenged whether Kalshi efficiently and accurately aggregates information...
-
Nevada Gaming Control Board - State agency
The Nevada Gaming Control Board, also known as the State Gaming Control Board, is a Nevada state governmental agency involved in the regulation of gaming and law enforcement of Nevada gaming laws throughout the state, along with the Nevada Gaming Commissi
-
Philadelphia - Largest city in Pennsylvania, United States
Philadelphia ( FIL-ə-DEL-fee-ə), colloquially referred to as Philly, is the most populous city in the U.S. state of Pennsylvania, and the sixth-most populous city in the United States, with a Census-estimated population of 1,574,281 in July 2025. The..
-
3rd Circuit - Court
The United States Court of Appeals for the Third Circuit is a federal court with appellate jurisdiction over the district courts for the following districts: District of Delaware District of New Jersey Eastern District of Pennsylvania Middle District of P
-
San Francisco - City in California
San Francisco, officially the City and County of San Francisco and colloquially known as The City, SF, or Frisco and San Fran, is the cultural, commercial, and financial center of Northern California.
-
United States Court of Appeals for the Ninth Circuit - Court
The United States Court of Appeals for the Ninth Circuit is a federal court of appeals that has appellate jurisdiction over the district courts in the following districts: District of Alaska District of Arizona Central District of California Eastern Distr
-
Nevada - US State
Nevada is a state in the Western United States. It is bordered by Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east.