Ninth Circuit rules sports-event contracts are state wagers, not CFTC swaps
A panel of Ninth Circuit judges ruled unanimously that sports-event contracts are sports wagers, not swaps. The ruling places them outside the Commodity Exchange Act and the CFTC's perimeter, leaving state gaming frameworks to regulate them. The decision deepens the boundary dispute between federal commodity law and state gaming authority for event-based trading products. It mirrors Nevada state court losses that have already forced geofencing and compounds Kalshi's exposure across multiple jurisdictions.
Kalshi and Robinhood now face a second federal circuit rejecting their core legal theory that CFTC registration shields sports contracts from state gambling laws. The Ninth Circuit joins Nevada state courts in stripping that federal preemption defense, exposing any platform with sports-linked contracts to state-by-state enforcement. Every new loss emboldens attorneys general in Connecticut and Baltimore, where parallel suits are already running.
Geofence costs multiply while legal spend compounds across cases that now outrun any single appeal. Traders hold positions whose validity shifts with geography, not regulation. The circuit split hardens into the exact pattern that New Jersey and now Crypto.com and Robinhood have asked the Supreme Court to resolve, but cert grants are rare and liquidity fragments first.