Ninth Circuit rules CEA does not preempt state gaming regulation of sports event contracts
The Ninth Circuit has ruled that the Commodity Exchange Act does not preempt state gaming regulation of sports event contracts. The court upheld state and tribal authority over sports-related event contracts in an August 28, 2026 ruling. The decision deepens an existing circuit split on federal preemption of state gambling laws over prediction market platforms. The ruling comes in the post-Fortis landscape as courts test how that precedent applies to event contracts.
The Ninth Circuit ruling deepens the circuit split that New Jersey is pressing the Supreme Court to resolve. Kalshi must now defend against state gambling authority on both coasts, with no federal shield in Nevada or the Ninth Circuit's western states. Polymarket, ForecastEx, and other CFTC-registered venues face identical exposure because the same preemption logic underpins their sports offerings.
The platform's legal spend compounds across parallel cases while its national market fragments into state-by-state geofences. Traders hold positions whose validity shifts with geography, not regulation. Each new state ruling emboldens the next attorney general to file. A Supreme Court grant would finally unify the rules, but cert is rare and state bans accumulate during the wait.
The Ninth Circuit joins the Third Circuit's Nevada ruling in rejecting CEA preemption, deepening the circuit split that New Jersey is asking the Supreme Court to settle while Connecticut and Baltimore file parallel suits.