Aug 28 - A federal appeals court on Friday denied Kalshi's request for an injunction that would bar Nevada from exercising regulatory authority over the company's prediction markets platform for sports outcomes. In a unanimous 3-0 decision, the 9th U.S. Circuit Court of Appeals in San Francisco held that the federal Commodity Exchange Act likely does not preempt Nevada's gaming regulations when they are applied to sports event contracts.
The ruling leaves in place the possibility that Nevada can proceed with oversight of Kalshi's contracts that allow individuals to place bets on the outcomes of sporting events. The court's analysis concluded that the Commodity Exchange Act probably does not override state gaming law in this specific context, denying the immediate federal relief Kalshi sought.
That conclusion stands in contrast to a recent decision from another appeals court. In April, the 3rd U.S. Circuit Court of Appeals in Philadelphia reached an opposite result, finding that New Jersey could not regulate Kalshi's platform. The differing outcomes between the 9th and 3rd Circuits create a split in the federal appeals courts on whether states or federal regulators should have primary authority over prediction market contracts tied to sports events.
Because of that split, the 9th Circuit's decision increases the likelihood that the Supreme Court may ultimately be asked to resolve which forum - state gaming regulators or the U.S. Commodity Futures Trading Commission - has the authority to regulate the fast-growing prediction markets industry. The appellate ruling does not itself determine a final winner in that broader dispute, but it does preserve Nevada's ability to apply its rules absent further intervention.
Requests for comment were not immediately returned by Kalshi, the Nevada Gaming Control Board and the Commodity Futures Trading Commission. The legal fight remains unresolved and now includes conflicting circuit court precedents that could lead to further litigation or a petition for Supreme Court review.
Additional context
The 9th Circuit opinion focused on whether federal law preempts state gaming regulation in the context of sports event contracts. The panel concluded that federal preemption was unlikely, and therefore Kalshi was not entitled to the injunction it requested. The decision reinforces a legal pathway for states to assert regulatory control over certain prediction market products while a separate appeals court has taken the opposite view.