Ninth Circuit rules sports event contracts are likely bets, letting Nevada enforce gambling laws
The Ninth Circuit ruled Friday that sports event contracts are likely bets, not federally protected derivatives. Nevada Attorney Gen. Aaron Ford announced the decision as a win for state regulatory authority. The ruling lets Nevada enforce its gambling laws against the contracts. The court's reasoning reaches any platform offering sports-linked contracts, not just the parties before it. Nevada considers such contracts wagering activity under state statute.
Kalshi's federal preemption defense is now failing at the circuit level. The Ninth Circuit treats CFTC registration as no shield against state gambling enforcement. Kalshi must geofence Nevada or absorb licensing costs its designation was designed to avoid. Rivals Polymarket and Novig face identical exposure because the reasoning reaches any platform offering sports-linked contracts.
Connecticut has already filed suit. Each new state loss shrinks the territory where federal designation protects contract validity. Traders hold positions whose legality now shifts with geography, not regulation. The circuit split with the Third Circuit makes Supreme Court review possible, but certiorari is uncertain while state bans accumulate.
Adds to Ninth Circuit precedent rejecting federal preemption for CFTC-registered sports event contracts, consistent with related rulings involving Robinhood, Kalshi, and Crypto.com.