Ninth Circuit upholds state and tribal authority over Kalshi sports contracts
The Ninth Circuit on August 28, 2026 upheld state and tribal authority over sports-related event contracts and remanded the separate issue of election contracts for further district court analysis. The ruling published this date reinforces Arizona's legal position against Kalshi, though litigation continues. The appellate decision does not resolve election contract classification, leaving that question for lower court review.
The ruling shreds the federal preemption defense Kalshi used to justify its national sports-contract rollout. State attorneys general now have appellate cover to treat CFTC-registered platforms as gambling operators subject to local licensing and blocking laws. Kalshi must choose between building costly state-by-state geofences or defending parallel lawsuits that multiply legal spend. The court separately remanded election contracts, so that product line remains in legal limbo and cannot anchor a nationwide strategy.
Rivals Polymarket and Novig face identical exposure because the Ninth Circuit's reasoning reaches any platform offering sports-linked contracts. Traders hold positions whose validity now depends on geography, not federal designation. A second circuit loss would trigger copycat filings, stretching compliance resources across Kalshi's active legal threats in multiple states. The one-day double loss to Nevada and Arizona signals that Kalshi's highest-profile test-case status makes it the target other state attorneys general watch most closely.