A federal appeals panel has given Nevada a significant win in its clash with prediction market operator Kalshi, holding that sports-event contracts listed on the company’s exchange are not “swaps” under federal commodities law and therefore are not shielded from state gaming rules.
On August 28, 2026, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s decision to lift a preliminary injunction that had blocked Nevada regulators from enforcing state law against Kalshi’s sports products.
Judge Ryan D. Nelson wrote the opinion, joined by Judge Bridget S. Bade.
Judge Kenneth K. Lee concurred.
The court said Kalshi had not shown a likelihood that the Commodity Exchange Act (CEA) preempts Nevada’s gaming statutes as applied to those contracts, and that the trial judge did not abuse his discretion in dissolving the injunction.
The dispute began after the Nevada Gaming Control Board told Kalshi to stop offering sports and election contracts to people in the state without a gaming license.
Kalshi, a Commodity Futures Trading Commission-registered designated contract market, argued that only the CFTC may regulate products traded on its exchange.
It sought court protection on the theory that the CEA gives the federal agency exclusive authority over swaps and that sports-event contracts fit that definition.
The Ninth Circuit rejected that reading.
The CEA, as amended by Dodd-Frank, defines a swap in part as an agreement whose payment depends on “the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.”
The panel concluded that betting on who wins a game, covers a spread, or records a statistic is wagering on an outcome, not on whether an event occurs.
Treating every sports wager as a swap, the judges said, would lack a limiting principle and would effectively make the CFTC the nation’s sports-betting regulator—an outcome
Congress did not clearly authorize.
The court also noted that current CFTC rules restrict designated contract markets from listing certain gaming-related contracts.
The decision is only partial. The panel affirmed the dissolution of the injunction as to sports-event contracts but sent the case back for further proceedings on Kalshi’s election contracts.
Related requests involving Crypto.com and Robinhood were also rejected as to sports offerings.
The ruling creates a clear split with the Third Circuit, which earlier this year concluded in a New Jersey case that similar Kalshi sports contracts likely are swaps and that federal law therefore bars state regulation.
That conflict raises the odds of Supreme Court review.
The CFTC has maintained that it has exclusive jurisdiction over prediction markets; a spokesman said the Ninth Circuit “teed up a circuit split that calls out for resolution” by the high court.
Kalshi said it would seek further review and argued that the Ninth Circuit still recognized that states generally may not regulate trading on a federally licensed exchange.
Nevada officials and the licensed gaming industry praised the decision as confirmation that sports betting remains a matter of state law.
For now, Nevada may continue to treat Kalshi’s sports products as unlicensed gambling. The larger question—whether a CFTC-registered exchange can offer sports contracts nationwide without state licenses—remains unsettled and is likely headed for a higher court.
