Nevada's no-swaps ruling holds as CFTC rulemaking fails delay bid

Nicole Saharsky filed a letter with the Ninth Circuit on September 25 that made a narrow but consequential argument: the court already knew about the CFTC's plans to revise its rules when it issued its ruling, so those plans change nothing.

The letter was a response to Kalshi's petition for rehearing en banc. Kalshi had argued that because the CFTC signalled it would revise 17 CFR 40.11 within two months, the court should either grant the rehearing or hold the petition until the new rule appeared. Saharsky, representing Nevada, rejected both options on the same grounds. The Ninth Circuit's August ruling that sports event contracts are not swaps rested on the text, context, and purposes of the Commodity Exchange Act. Section 40.11 was cited only to dismiss one of Kalshi's subsidiary arguments. Rewriting that section does not rewrite the statute.

This is the part the coverage has missed. The CFTC's two proposed rules — one that would extend the swap definition to include event contracts, one that would carve out casino-style products — are meaningful in the long run. They are not meaningful to the Ninth Circuit's immediate reasoning, because that reasoning did not depend on the agency's regulatory interpretation. It depended on congressional text. An agency can redefine what falls within its own rules. It cannot redefine what Congress wrote.

Saharsky named the strategic intent plainly in her filing: Kalshi's petition is an attempt to delay, so the company can continue operating while the legal ground is contested. That framing matters. Kalshi has been losing in court with some consistency — the Ninth Circuit in August, the Sixth Circuit last week on Ohio and Tennessee, the tribal land ruling in Blue Lake Rancheria. Each loss narrows the argument available for the next forum. A delay buys time, but time spent operating under a cloud of adverse rulings is not the same as time spent building a durable legal position.

The CFTC's rulemaking, sent to the White House Office of Information and Regulatory Affairs for review, signals something the agency cannot say directly: it believes its regulatory authority needs statutory reinforcement that the courts have declined to supply. One proposed rule would define swaps to include event contracts. The other would exclude products resembling casino games. Together they read less like confident jurisdictional assertion and more like an agency drafting around losses it expects to accumulate.

Bill Miller's remark at G2E — "the only way we lose is if we take our foot off their throat" — describes the coalition's strategic logic accurately. The states do not need to win at the Supreme Court. They need to keep winning long enough that the CFTC's rulemaking either fails White House review, stalls in litigation, or arrives too late to matter. The Ninth Circuit's refusal to be distracted by the agency's regulatory calendar is one step in that sequence.