Ninth Circuit rules sports event contracts are state gambling, not federal swaps
The Ninth Circuit ruled 3-0 on Friday that sports event contracts are likely bets, not federally regulated swaps, allowing Nevada to enforce its state gambling laws against them. The decision rejects arguments by Kalshi, Crypto.com, and Robinhood that their CFTC-registered platforms shield sports-linked contracts from state oversight. Attorney General Mayes celebrated the ruling as affirming state authority over gambling operations. The court found that labeling a sports bet as a 'swap' does not remove it from state gambling oversight.
Kalshi's federal preemption defense now carries a federal appellate loss. The Ninth Circuit joins state courts in rejecting the claim that CFTC registration blocks state gambling enforcement. Rivals Polymarket and Novig face identical exposure. Kalshi's higher profile makes it the test case attorneys general target first.
Traders face contract validity that shifts with geography, not federal designation. Each new loss forces Kalshi toward expensive state-by-state geofences or voided contracts. The circuit split with the Third Circuit offers a path to Supreme Court review. That timeline stretches years. Legal spend compounds across parallel dockets while the platform's national sports market fragments.
Nevada with Connecticut, Washington, Michigan, Wisconsin, New York, and Utah in rejecting Kalshi's federal preemption defense, making the Ninth Circuit the seventh jurisdiction to rule that CFTC registration does not block state gambling enforcement.