Ninth Circuit Sides With Nevada on Sports Event Contracts

The U.S. Court of Appeals for the Ninth Circuit ruled 3-0 in favor of Nevada on August 28, 2026, holding that the federal Commodity Exchange Act does not preempt the state’s gaming laws as applied to sports event contracts offered by prediction market KalshiEX.

A three-judge panel affirmed a district court order dissolving a preliminary injunction that had blocked the Nevada Gaming Control Board from enforcing state law against Kalshi’s sports-related event contracts. The panel concluded Kalshi had not shown a likelihood that the Commodity Exchange Act preempts state gaming regulations as applied to those contracts, according to the court’s opinion.

The Cease-and-Desist Letter

The case began in March 2025, when the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter demanding that it stop offering its election and sports event contracts. The Board concluded the sports event contracts were “a system or method of wagering on sporting events and other events,” and that Kalshi was operating as an unlicensed sports pool in violation of Nevada gaming regulations. The Board warned it would pursue civil or criminal enforcement action if Kalshi did not stop offering the contracts in Nevada.

Kalshi sued the Board, its members, the State of Nevada, and the Nevada Attorney General, seeking a preliminary injunction. Kalshi argued it is not a sports betting platform but a designated contract market under the Commodity Exchange Act, and that the Commodity Futures Trading Commission holds exclusive regulatory authority over its sports event contracts. A district court granted the injunction in April 2025, but later dissolved it, and the Ninth Circuit affirmed that dissolution.

Why the Court Rejected Preemption

Judge Ryan D. Nelson, writing for the panel, rejected Kalshi’s preemption arguments on each of three grounds: express, conflict, and field preemption.

On express preemption, the panel concluded that the sports event contracts were not “swaps” under the statute’s definition because they were sports bets. The opinion stated that the substance of the contracts offered on Kalshi’s platform is sports gambling, regardless of what Kalshi calls them, noting that users can effectively place prop bets, bet the point spread, bet a specific score, or create multi-leg parlays, with the payout depending on the performance of a team or player.

The panel also concluded that Kalshi’s self-certification and listing of the contracts was unlawful under a federal regulation that prohibits a registered entity from listing a contract that involves, relates to, or references gaming. The court noted the CFTC never invoked its discretionary review or issued an order approving Kalshi’s sports event contracts, so the prohibition on listing them remained in effect.

On conflict preemption, the panel rejected Kalshi’s argument that it was impossible to comply with both Nevada law and the federal act. The court observed that regulated entities in Nevada use geofencing and that Kalshi could do the same, finding Kalshi had not shown that complying with Nevada law would jeopardize its designated contract market status. The panel also rejected Kalshi’s field preemption argument, concluding that Congress has not occupied the field of gambling and that the Nevada laws at issue regulate gaming activity.

Kalshi’s Contracts and the Concurrence

The opinion described Kalshi’s advertising of itself as “the first app for legal sports betting in all 50 states.” According to the opinion, over 90% of Kalshi’s trades in 2025, representing 95% of its revenue, were sports related. Kalshi had self-certified the contracts to the CFTC in January 2025, allowing users to buy and sell contracts on outcomes including who will win the Super Bowl and what song will open the halftime show.

Judge Kenneth K. Lee concurred. He wrote that one statutory provision gave him pause because the special rule appears to give the CFTC discretion whether to ban gaming contracts altogether, so the statute does not seem to categorically bar all gaming contracts. He concluded the question need not be resolved because the existing federal regulation currently bars gaming contracts and controls the outcome of the appeal.

Remand and State Reaction

The panel remanded the case for the district court to consider Nevada’s challenges to Kalshi’s election contracts, which the district court had not analyzed, consistent with the opinion.

The Nevada Gaming Control Board said in a statement that the ruling rejected the view that the Commodity Exchange Act preempts Nevada’s gaming laws as applied to sports event contracts offered by Kalshi, Crypto.com, and Robinhood. The Board considers sports event contracts, along with certain other event contracts, to constitute wagering activity under Nevada law, and said entities offering these contracts must be licensed in the state. The Board has also determined that Kalshi’s operations are unlawful in Nevada.

“We are pleased with the Ninth Circuit’s ruling today in favor of Nevada,” Nevada Gaming Control Board Chairman Mike Dreitzer said in the statement. “This is sports betting and needs to be properly regulated by the state.”

Nevada Governor Joe Lombardo said in the statement: “Prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework.” The Board said it has taken action in recent months to halt the operations of other prediction markets in the state and has restricted the operation of unlicensed prediction markets that had been operating in Nevada.