Ninth Circuit Deals Kalshi Major Blow, Rules Sports Event Contracts Aren’t CFTC-Regulated Swaps

A federal appeals court has ruled against Kalshi's bid to operate sports-event prediction contracts under federal commodity law, instead determining that Nevada's gaming regulations apply to the platform's offerings. The Ninth Circuit sided with a lower court's earlier judgment that the company failed to demonstrate federal law preempts Nevada's authority over the contracts. By classifying Kalshi's products as sports bets rather than commodity swaps, the court has effectively opened the door for Nevada to enforce its existing gaming rules against the platform.

The decision represents a significant setback for Kalshi's regulatory strategy. The company had argued its contracts should fall under federal Commodity Exchange Act protections, which would position them differently under U.S. oversight. Instead, the appeals court's reasoning treats the products as subject to state-level gaming jurisdiction, limiting Kalshi's ability to operate without compliance with Nevada's gaming framework.

• Ninth Circuit ruled Kalshi's sports contracts are gaming products, not federally-regulated commodity swaps, allowing Nevada to enforce its gaming laws.
• The court affirmed an earlier lower court finding that federal law does not preempt state authority over the platform's offerings.
• The ruling significantly constrains Kalshi's regulatory pathway and may force operational changes to align with state gaming requirements.