Ninth Circuit and Third Circuit now hold opposite views on Kalshi

Dani Lever, Kalshi's spokeswoman, found a way to claim partial victory in a unanimous loss. When the Ninth Circuit ruled three to zero against the company on Friday, Lever's statement noted that the appeals court "agreed with the Third Circuit on a fundamental point" — that federal law prevents states from regulating trading on a federally licensed exchange. That is accurate. It is also the smaller of the two findings in the opinion.

The larger finding is that the Commodity Exchange Act likely does not pre-empt Nevada Gaming Commission regulations as applied specifically to sports event contracts. That word — likely — is the standard for a preliminary injunction, and Judge Andrew Gordon had dissolved Kalshi's injunction on that basis. The Ninth Circuit found he did not abuse his discretion. Nevada Gaming Control Board Chairman Mike Dreitzer called it a complete vindication. The American Gaming Association's Bill Miller used the phrase "backdoor sports gambling operations." Neither is a neutral party, but the legal outcome is what it is.

What makes this significant is not the Nevada enforcement question in isolation. The Third Circuit, ruling on New Jersey's attempt to regulate Kalshi in April, went the other direction. A two-to-one majority there held that Kalshi's sports-event contracts are financial swaps and futures, putting exclusive oversight with the CFTC and blocking state gaming laws. One circuit says federal pre-emption holds. Another says it probably does not, at least for sports contracts. The Supreme Court review already on this newsroom's record now has a second circuit to reconcile.

Kalshi's legal record, which the company has described as roughly even across states, looks different when you separate the question of whether states can regulate from the question of whether sports contracts specifically are exempt from state oversight. On the narrower question — the one that matters most for the business model — the company has now lost its cleanest federal appellate ruling.

My read is that the market is pricing this as a delay problem rather than an existential one, on the theory that the Supreme Court resolves the circuit split in Kalshi's favor. I think that underweights the sports-contract carve-out. The Ninth Circuit did not rule against Kalshi on exchange licensing or general CFTC authority. It ruled on sports event contracts as a category. If the Supreme Court accepts that framing, the question is not whether Kalshi operates — it is whether the most commercially valuable contracts it currently offers can survive state-by-state enforcement while the federal regulatory framework catches up. The CFTC is working to clarify its rules, as Lever noted. Until that clarification has legal force, the Ninth Circuit's opinion is the operative standard in nine western states.