The Ninth Circuit ruled Kalshi's sports contracts are not swaps under federal law.
Why it matters: The ruling strengthens state gambling regulators and undercuts prediction-market platforms that rely on federal commodities law. It also creates a direct split with the Third Circuit, increasing the odds the Supreme Court eventually steps in.
- On Aug. 28, 2026, the Ninth Circuit ruled in KalshiEX, LLC v. Assad that sports-related event contracts are not swaps under the Commodity Exchange Act.
- The court said Nevada can enforce its gaming laws against Kalshi's sports-contract business.
- The Ninth Circuit said Kalshi's reading would sweep nearly all sports wagering into the CFTC's exclusive jurisdiction.
- The decision conflicts with the Third Circuit's April 6, 2026 ruling in KalshiEX LLC v. Flaherty.
The Ninth Circuit's ruling escalates a fast-moving legal fight over prediction markets and sports wagering. In KalshiEX, LLC v. Assad, the panel held that sports-related event contracts are not swaps under the Commodity Exchange Act, a result that allows Nevada to keep enforcing its gaming laws against Kalshi's sports business.
The court rejected Kalshi's broader reading of the law, saying it would sweep "nearly all sports wagering" into the CFTC's exclusive jurisdiction. The panel said that approach would clash with the statutory text and Congress' balance between state and federal authority over gaming.
The ruling sets up a direct circuit split with the Third Circuit's April 6 decision in KalshiEX LLC v. Flaherty. There, the Third Circuit said Kalshi's sports-related event contracts likely are swaps because they are associated with a potential financial, economic, or commercial consequence, and therefore are preempted from state regulation.
State officials quickly framed the Ninth Circuit ruling as a win for gambling regulators. Arizona Attorney General Kris Mayes said, "Calling a sports bet a 'swap' doesn't make it one," in a statement posted by her office here. The Nevada Attorney General's office said, "sports betting does not become something else simply because a company calls it an 'event contract,'" according to an AP quote.
Kalshi is described in the record as a CFTC-licensed designated contract market offering event contracts on sports, elections, weather and other outcomes. The CFTC has also said it has filed lawsuits against multiple states and has used emergency authority in response to state actions against Kalshi, adding another layer to the regulatory fight.
By the numbers
- Aug. 28, 2026 - Date of the Ninth Circuit ruling in KalshiEX, LLC v. Assad.
- Apr. 6, 2026 - Date of the Third Circuit ruling in KalshiEX LLC v. Flaherty.
- 2 circuits - The Ninth and Third Circuits now split on whether sports-related event contracts are swaps.
Yes, but: The record does not show a filed Supreme Court petition yet, so the timing of any high-court review is still uncertain.
What's next: A cert petition or further Supreme Court action would be the next major development, but none is yet confirmed in the record.