Ninth Circuit Rejects Kalshi's Federal Preemption Claim
Appeals court rules CFTC jurisdiction doesn't override Nevada's authority to regulate sports contracts.
The Ninth Circuit Court of Appeals upheld a lower court ruling against Kalshi on August 28, 2026, finding the prediction markets platform failed to demonstrate that federal CFTC authority preempts Nevada's power to regulate sports event contracts.
Why It Matters
This ruling directly limits Kalshi's ability to operate sports betting-adjacent prediction markets in Nevada without state approval — and sets a precedent that could ripple across other regulated gambling states. The court's rejection of Kalshi's federal preemption argument means the CFTC's jurisdiction claim does not automatically override state gaming law, at least not within the Ninth Circuit's territory. For bettors and operators alike, this signals that prediction markets platforms cannot use federal commodity trading status as a universal bypass around state licensing regimes. Any platform pursuing a similar strategy in California, Oregon, or other Ninth Circuit states now faces a materially harder legal path, according to The Block.
Context
Kalshi has argued that its sports contracts qualify as CFTC-regulated commodity futures, placing them beyond the reach of state gambling regulators. Nevada's gaming authorities pushed back, asserting that the contracts function as sports wagers under state law regardless of how they are federally classified. The lower court sided with Nevada, and as of August 2026, the Ninth Circuit has now affirmed that position.
What's Next
Kalshi can petition for an en banc Ninth Circuit rehearing or escalate the dispute to the Supreme Court — either path likely extends the timeline by one to several years. Meanwhile, Nevada regulators retain authority to enforce state rules against the platform while the legal fight continues.
Source: The Block. Gambling involves financial risk; outcomes are never guaranteed.
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