The Kalshi Ninth Circuit ruling handed down on 28 August affirmed the dissolution of Kalshi’s preliminary injunction against Nevada gaming enforcement, finding the platform unlikely to succeed on its preemption arguments at this stage of litigation. The 3-0 panel, composed of Judges R. Nelson, Bade, and Lee, held that Kalshi’s sports-event contracts likely fall outside the statutory definition of ‘swap’ because they function as sports bets, not financial derivatives.
Judge Nelson’s opinion put it plainly: ‘the CFTC is not a national gambling regulator.’ The Nevada Resort Association, representing the state’s casinos, had intervened as a defendant-appellee, and its position prevailed at this stage.
What the Kalshi Ninth Circuit Ruling Actually Decided
Kalshi first self-certified its sports-event contracts with the Commodity Futures Trading Commission (CFTC) on 22 January 2025. It won an initial preliminary injunction against Nevada in April 2025. That injunction was dissolved by the district court in November 2025, prompting the appeal that produced last week’s opinion.
The Ninth Circuit rejected Kalshi’s express, conflict, and field-preemption arguments at the preliminary-injunction stage. It did not issue a final ruling on the merits, and it did not invalidate the CFTC’s pending proposed rulemaking.
The same ruling disposed of consolidated appeals from Crypto.com and Robinhood Derivatives, according to BurgherGray. Both platforms had sought similar injunctions against Nevada enforcement; both were affirmed dissolved.
Judge Kenneth K. Lee’s concurrence went further than the majority needed to go, expressly acknowledging the historical role of Indian tribes in regulating sports gambling. Holland and Knight notes that the concurrence strengthens the hand of tribal regulators in a separate Ninth Circuit proceeding, Blue Lake Rancheria v. Kalshi (No. 25-7504), which involves California tribal plaintiffs and was argued in San Francisco on 10 July 2026.
The majority opinion also flagged concerns under the major-questions doctrine. Gaming attorney Daniel Wallach called the CFTC’s proposed rule ‘DOA’ on that basis. Ripple CTO emeritus David Schwartz pushed back, writing ‘This seems to be incorrect to me’ and arguing that Congress could establish a federal framework for exchange-traded contracts without displacing state-regulated sportsbooks. Schwartz’s view was his own, not a Ripple corporate position.
The opinion’s language was conditional: Kalshi’s broad reading of ‘swap’ ‘would raise concerns under the major-questions doctrine.’ The court did not hold that doctrine categorically bars the CFTC from regulating prediction markets.
Circuit Split and the CFTC Proposal
The Third Circuit reached the opposite conclusion in KalshiEX LLC v. Flaherty (No. 25-1922), decided 6 April 2026 in a 2-1 opinion. Judge Jane Richards Roth dissented, writing that Kalshi’s offerings are ‘virtually indistinguishable from the betting products available on online sportsbooks, such as DraftKings and FanDuel.’ New Jersey’s enforcement action had threatened criminal penalties of up to $100,000 for what the state characterised as illegal betting on collegiate sports.
A Southern District of New York court added a third data point on 13 July 2026, assuming without deciding that Kalshi’s contracts qualify as swaps, but holding that CFTC exclusive jurisdiction still does not preempt state gaming regulation, according to the Blue Lake Rancheria Ninth Circuit opinion.
The circuit split materially raises the probability of Supreme Court review, though no petition is confirmed. New Jersey faced a 3 September deadline to seek further review of the Third Circuit decision.
Meanwhile, the CFTC’s proposed rulemaking continues its own path. The agency’s 10 June 2026 Notice of Proposed Rulemaking (Release No. 9249-26) proposes amending Regulation 40.11 and adding a new Appendix F to Part 40. Published in the Federal Register as 91 Fed. Reg. 35806, the rule would replace categorical prohibitions on gaming-related event contracts with a case-by-case public-interest review. A contract ‘involves’ a prohibited activity if its settlement is ‘determined by an occurrence, extent of an occurrence, or contingency in the activity.’ The 90-day review process would apply to contracts touching gaming, terrorism, assassination, war, and activities unlawful under federal or state law. Any final rule takes effect 60 days after Federal Register publication.
The comment period closed 27 July. The WilmerHale analysis notes the proposed rule runs nearly three pages in the Federal Register, supplemented by Appendix F across another nine pages. The Congressional Research Service notes that the CFTC dropped its appeal of earlier Kalshi litigation following the 2024 presidential election and a change in agency leadership, and withdrew a prior 2024 proposed rule. Under current leadership, the agency has not initiated a Rule 40.11 review of any event contracts.
Rehearing Petition and What Comes Next
As of 22 September 2026, Kalshi filed a petition asking the Ninth Circuit to rehear the Assad case panel-wide or en banc, according to the TickerTracker case tracker. Paradigm Operations and the Coalition for Prediction Markets filed amicus briefs supporting the petition. The petition holds the mandate: the district court remand on election contracts and a stayed Arizona appeal both sit in queue until the Ninth Circuit acts.
A final CFTC rule, if it emerges, will face an Administrative Procedure Act challenge. The Ninth Circuit’s major-questions language gives prospective plaintiffs a ready-made framing. Whether that framing survives depends entirely on the scope the agency claims in its final text. The sharper the agency’s authority claim, the cleaner the challenge.
The Skadden and Lowenstein Sandler analyses of the Third Circuit’s Kalshi win now sit alongside a directly conflicting Ninth Circuit opinion. The binary is clean: either the Supreme Court takes the case and sets a national rule, or prediction-market operators continue navigating a patchwork of state enforcement actions indefinitely.
