Ninth Circuit rejects Kalshi rehearing bid, leaving state gambling law exposure intact
The U.S. Court of Appeals for the Ninth Circuit denied Kalshi's bid for a rehearing on November 7, 2026. The ruling leaves the prediction market platform exposed to state gambling enforcement in the circuit's jurisdiction. Kalshi now has until February 2, 2027 to petition the Supreme Court. The case turns on conflicting circuit decisions over whether the Commodity Exchange Act preempts state gambling laws as applied to event contracts. State courts have separately rejected Kalshi's argument that it is a commodities trader rather than a gaming operator.
The Ninth Circuit's denial locks in a circuit-level loss that Kalshi cannot unwind without Supreme Court intervention. State attorneys general in Utah, Ohio, Tennessee, and Louisiana are copying each other's wins against the platform, treating every federal setback as fresh leverage. Kalshi must now budget for three simultaneous fights: defending state suits, lobbying federal rulemaking, and possibly petitioning the Supreme Court.
Each additional circuit loss emboldens the next state filing. The CFTC's swap-rule proposal sits in White House review, slower than any criminal trial. Kalshi co-founders Mansour and Lopes Lara already face felony charges in Utah, raising personal prison exposure that concentrates executive attention.
The denial joins Kalshi's rehearing losses in Nevada and the broader Ninth Circuit, extending a string of federal appellate setbacks that now spans multiple circuits and leaves the platform defending state gambling suits without a functioning preemption shield.