Ninth Circuit rules Kalshi sports contracts are bets, not swaps
The Ninth Circuit ruled that Kalshi sports contracts are bets rather than swaps under federal law. The decision lets Nevada enforce its gaming laws against the contracts and creates a circuit split with the Third Circuit, which earlier this year reached the opposite conclusion in a New Jersey case involving similar Kalshi sports contracts. Kalshi had argued its CFTC registration preempted state gambling law. The ruling also drew speculation that regulation could shift state-by-state.
Kalshi must now geofence Nevada or face state gambling enforcement that its CFTC registration no longer blocks. The ruling shrinks the territory where federal designation protects contract validity. Polymarket and Novig face identical exposure because the reasoning reaches any platform offering sports-linked contracts.
Connecticut has already filed suit. Traders hold positions whose legality shifts with geography. The circuit split with the Third Circuit raises Supreme Court review odds, but months of uncertainty remain while state bans accumulate. The first platform a court makes an example of will set the compliance bar every competitor races to clear.