Kalshi suffered a legal setback after a federal appeals court ruled that Nevada can continue enforcing its state gambling laws against the company’s sports event contracts while the broader case moves forward.
In a unanimous decision, a three-judge panel of the Ninth Circuit Court of Appeals found that Kalshi’s sports contracts are likely closer to sports betting than financial swaps. As a result, the court said Kalshi had not shown that federal commodities law overrides Nevada’s authority to regulate sports wagering.
The judges noted that contracts based on the outcome of sporting events carry the characteristics of traditional sports betting. They also pointed to Kalshi’s own marketing, which has promoted the platform as a way to legally bet on sports across the United States.
The ruling allows Nevada gaming regulators to continue enforcing state laws and licensing requirements against Kalshi. The company had argued that because it operates as a federally regulated exchange under the Commodity Futures Trading Commission (CFTC), state gambling laws should not apply to its event contracts.
The decision upholds an earlier ruling that dissolved a temporary injunction protecting Kalshi from Nevada regulators. The Nevada Gaming Control Board had previously ordered the company to stop offering sports event contracts without obtaining the licenses required for sportsbooks operating in the state.
The case highlights a growing legal battle over prediction markets and sports event contracts in the United States. While the Ninth Circuit sided with Nevada, another federal appeals court reached the opposite conclusion earlier this year in a case involving New Jersey. That disagreement between courts could increase the chances of the issue eventually reaching the U.S. Supreme Court.
Kalshi is also facing legal challenges in several other states, including Connecticut, Maryland, Arizona, and Washington, as regulators debate whether its products should be treated as financial contracts or sports wagers.
The appeals court also sent a separate dispute involving Kalshi’s election-related contracts back to a lower court for further review. Those contracts were not fully resolved by the latest ruling and will continue through the legal process.
For now, the decision strengthens the position of state regulators who argue that sports event contracts should be subject to local gambling laws and consumer protections, rather than falling solely under federal financial regulation.
