Ninth Circuit ruling puts Kalshi sports model under federal review

Jennifer Davenport filed 47 pages with the Supreme Court on Wednesday, and the argument she built around a single question: did Congress accidentally federalize the entire American sports gambling industry in 2010 when it passed Dodd-Frank?

The Third Circuit said yes, in April, ruling 2-1 that the Commodity Futures Trading Commission holds exclusive jurisdiction over Kalshi's sports event contracts, preempting New Jersey's gaming laws. The Ninth Circuit said no, ruling 3-0 that those same contracts fall outside the Commodity Exchange Act's definition of swaps and remain subject to state regulation. Two federal appellate courts, one legal question, opposite answers. Davenport's filing did not create the circuit split — it simply handed the Supreme Court a clean vehicle to resolve it.

The jurisdictional mechanics matter here. The Dodd-Frank Act rewrote the CEA's swap definitions to capture instruments that looked like derivatives but had previously escaped CFTC oversight. What Dodd-Frank's drafters were thinking about in 2010 was credit default swaps and interest rate products — not sports event contracts on a prediction market that did not yet exist. The Ninth Circuit's 3-0 ruling leaned on that gap: if the instrument does not fit the statutory definition, federal preemption does not attach, and state gaming law governs. The Third Circuit read the same statute and reached the opposite conclusion, finding that CFTC registration is the operative fact and that preemption follows from it.

Kalshi's position, stated through spokeswoman Dani Lever, is that it is a federally regulated exchange operating within that registration's authority. That argument prevailed in Philadelphia. It failed in San Francisco. It now goes to Washington.

The consensus view on this, reading the coverage, is that the Supreme Court will grant certiorari and rule sometime in 2027. I think that framing undersells what the Ninth Circuit's unanimity signals. A 2-1 decision in the Third Circuit against a 3-0 in the Ninth is not a close call dressed up as a split — it is the appellate system flagging that the statutory question is genuinely unresolved. The Court does not need to wait for a third circuit to weigh in. The vehicle is clean, the states are aligned across ideological lines as Davenport noted, and the commercial stakes have grown large enough that delay carries its own costs. I would expect the Court to move faster than the 2027 baseline suggests, and I would expect the oral argument, whenever it comes, to turn on the legislative history of Dodd-Frank rather than on Kalshi's registration status.

Davenport's framing of the tribal and casino stakes is the sentence that has not received enough attention. She is arguing that Kalshi's preemption theory, if it holds, does not stop at prediction markets — it reaches any CFTC-registered product that touches a sporting outcome. That is a much larger surface area than the current litigation suggests, and it is why New Jersey's brief describes the threat as reaching "the over 150-year tradition of state gaming regulation." Whether the Court accepts that framing or narrows its ruling to the specific instrument before it will determine how much of the existing sports betting infrastructure is exposed.