Better Markets lauds Ninth Circuit ruling telling Kalshi to stop 'pretending wagers are derivatives'
The US Court of Appeals for the Ninth Circuit ruled against Kalshi in a case over its sports event contracts on August 28, 2026. Better Markets, a financial reform advocacy group, applauded the decision. The group's legal director, Dominick Freda, framed the ruling as a rebuke to Kalshi's effort to characterize its products as derivatives rather than wagers. The court rejected Kalshi's bid to shield its sports contracts from state gaming regulations.
Kalshi must now geofence Nevada or absorb state gambling enforcement that federal registration no longer blocks. The ruling shrinks the territory where CFTC designation protects contract validity. Polymarket and Novig face identical exposure because the reasoning reaches any platform offering sports-linked contracts. Traders hold positions whose legality shifts with geography, not regulation. Connecticut already sued on similar grounds.
Each new state loss emboldens the next attorney general to file. Kalshi's legal spend compounds across parallel cases while its national sports market fragments. A circuit split with contrary federal rulings raises Supreme Court review odds, but that timeline stretches across months while state bans accumulate. The first platform the CFTC or a state makes an example of will set the compliance cost baseline for every competitor racing to build geofences.
The Ninth Circuit ruling that sports contracts are bets not swaps follows Kalshi's earlier federal appellate loss and state court fights with Connecticut and Nevada regulators, each stripping away the preemption shield CFTC-registered platforms had treated as national protection.