Ninth Circuit rules 3-0 against Kalshi on sports event contracts
The US Court of Appeals for the Ninth Circuit ruled 3-0 against Kalshi on August 28, finding its sports event contracts fell outside permissible trading under the Commodity Exchange Act despite being traded on a designated contract market. Separately, Kalshi objected to claims equating its sports event contracts with traditional sports betting. The article citing the objection provided no further details on context, the party making the claims, or associated proceedings.
Kalshi now faces a binding appellate ruling that CFTC designation alone does not guarantee contract legality. The Ninth Circuit's interpretation of § 1a(47)(A)(ii) creates a precedent other circuits may adopt, threatening the legal foundation for Kalshi's national sports contract market. State attorneys general in Connecticut, New York, and Wisconsin already argue these contracts violate local gambling law. The ruling gives them federal appellate cover.
Kalshi must either persuade the Ninth Circuit to rehear the case or take its chances before the Second Circuit on parallel state fights. Either path stretches over months while geofencing costs mount and traders face contracts whose validity depends on geography. Rivals Polymarket and Novig hold identical CFTC registration but lower litigation profiles; Kalshi's visibility makes it the test case every state targets first.