A federal appeals court ruled Friday that Kalshi failed to show federal law preempts Nevada’s sports-betting authority. State gaming regulators, the panel held, remain in charge of the company’s event contracts.
The decision came from a three-judge panel of the Ninth Circuit. It rejects the core argument Kalshi has pressed in courts across the country: that the Commodity Exchange Act (CEA), the federal statute the Commodity Futures Trading Commission (CFTC) cites to claim “exclusive jurisdiction” over prediction markets, bars states from applying their own gambling laws to the company’s contracts. In practice, that means a state regulator can keep treating Kalshi’s sports markets as sports betting, not as a federally overseen derivative.
“We conclude that Kalshi has not shown a likelihood that the CEA preempts state gaming regulations as applied to its sports event contracts and that the district court did not abuse its discretion by dissolving the injunction,” the panel wrote.
The case traces to 2025. The Nevada Gaming Control Board sent Kalshi a cease-and-desist letter demanding it stop offering its election and sports event contracts in the state, threatening criminal or civil charges. Kalshi sued the board and the state. It asked a district judge for a preliminary injunction to block Nevada’s enforcement. That court granted the injunction, then dissolved it after a separate ruling went against Crypto.com, the exchange that had launched a rival prediction product. Kalshi appealed.
Friday’s ruling affirms the dissolution. The CEA, the Ninth Circuit concluded, likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts. It is the second federal court to tell Kalshi its preemption argument does not hold. The result sits in tension with rulings other federal courts have reached in the CFTC’s separate fights with state regulators.
The CFTC has sued several states as the federal government and state regulators clash over how the prediction-market industry should be regulated. The agency has put forward a proposed framework for the sector. CFTC Chair Michael Selig has said the agency holds “exclusive jurisdiction” over prediction markets, including sports-related contracts. That is the position Kalshi relied on in Nevada.
Both Kalshi and the CFTC signaled Friday that the fight is not over.
“A derivative contract structured as a swap is a swap regardless of the underlying subject matter — the only exceptions in statute are onions and movie box office receipts,” a CFTC spokesperson, Zach Fulton, said in an emailed statement. “The Ninth Circuit erred today when it invented a new and textual exception to the CEA.” Fulton added that the case is “now teed up a circuit split that calls out for resolution by the Supreme Court.”
If the Supreme Court agreed to hear the case, the justices would weigh whether the CEA displaces state gambling law for prediction markets or leaves states a lane.
“Despite the Ninth Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations,” a Kalshi spokesperson, Dani Lever, said in a statement. “We will be seeking further review.”
Neither statement amounts to a filed petition. Both indicated the agency and the company intend to seek further review. Neither said where or when.
State officials across the country have raised concerns about prediction markets as the industry has grown. The Ninth Circuit’s opinion is dated Aug. 28, 2026; the case is docketed as No. 25-7516.
