Ninth Circuit rules Kalshi sports contracts are gambling, not swaps
The US Court of Appeals for the Ninth Circuit ruled Friday that Kalshi's sports event contracts are sports bets, not swaps protected by the Commodity Exchange Act. The decision sides with Nevada gaming regulators and rejects Kalshi's argument that federal law preempts state gambling authority. Nevada Attorney General Aaron Ford's office and Mayer Brown LLP represented state officials. Crypto.com and Robinhood were also involved. The court noted the contracts bear the hallmarks of sports betting but did not resolve all questions in the case.
Kalshi's federal preemption defense now carries a federal appellate loss, not just state trial setbacks. The Ninth Circuit joins state courts in Connecticut, Washington, Michigan, Wisconsin, New York, and Utah in rejecting the claim that CFTC registration blocks state gambling enforcement. Rivals Polymarket and Novig face identical exposure, but 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, but that timeline stretches years. Legal spend compounds across parallel dockets while the platform's national sports market fragments.