Ninth Circuit lets Nevada regulate Kalshi sports contracts as gambling
The Ninth Circuit ruled August 31 that Nevada can regulate Kalshi's sports event contracts as gambling, rejecting the company's argument that federal derivatives law preempts state gaming laws. Judge Ryan Nelson wrote that Kalshi describes and markets the contracts as legal sports betting. The decision creates a circuit split with contrary federal rulings elsewhere on whether such contracts are swaps under CFTC jurisdiction or state-regulated bets.
Kalshi must now geofence Nevada or face state gambling enforcement that federal registration no longer blocks. The ruling shrinks the territory where CFTC designation protects contract validity. Polymarket and other platforms face identical exposure because the reasoning reaches any venue offering sports-linked contracts. Traders hold positions whose legality shifts with geography, not regulation. Each new state loss emboldens the next attorney general to file.
Connecticut already sued on similar grounds. Kalshi's legal spend compounds across parallel cases while its national sports market fragments. The circuit split raises Supreme Court review odds, but that timeline stretches across months of uncertainty while state bans accumulate. A J.P. Morgan analyst separately framed the contracts as gambling regardless of Kalshi's swaps label, adding Wall Street skepticism to the regulatory pressure.