Saharsky files against Kalshi delay bid at Ninth Circuit

Nicole Saharsky's argument to the Ninth Circuit was not complicated. Kalshi had asked the court to hold its rehearing petition until the CFTC published revised rules — rules the agency told the White House it would deliver within two months. Saharsky, representing Nevada, filed a letter on September 25 saying the wait would accomplish nothing, because the Ninth Circuit's no-swaps ruling was never about the rule. It was about the statute.

That distinction is doing significant work in this litigation, and the consensus view that CFTC rulemaking can stabilize Kalshi's legal position is less solid than the volume of filings makes it appear.

The Ninth Circuit's August ruling — unanimous, three judges — held that sports-event contracts offered by Kalshi are likely not swaps under the Commodity Exchange Act, and that the CEA therefore does not preempt Nevada gaming law. The court reached that conclusion through the text, context, and purposes of the statute itself. Section 40.11, the regulatory provision Kalshi pointed to as evidence of congressional intent to give the CFTC jurisdiction over sports contracts, was cited by the court only to reject one of Kalshi's subsidiary arguments. It was not the load-bearing wall. The CEA's text was.

Saharsky made this explicit. The court knew the CFTC intended to revise Section 40.11 when it issued the decision. The CFTC's subsequent submission of two proposed rules to the White House Office of Information and Regulatory Affairs — one to define swaps more broadly to include event contracts, one to exclude casino-style gambling products — is not new information to the court. It is a timeline update.

This is the seam the market is not pricing correctly. Regulatory redefinition operates at the agency level. Statutory interpretation operates at the level the court has already reached. When a circuit court says a contract is not a swap because the Commodity Exchange Act's text does not support that classification, a revised agency rule defining swaps more broadly does not reverse that reading — it creates a new legal question about whether the revised rule is itself consistent with the statute. That question would almost certainly return to the same circuit that just answered the first one.

The CFTC's rulemaking, in other words, does not rescue the position. It resets the clock and opens a second front, while the first front — Nevada, the Ninth Circuit, the en banc petition — remains active and unfavorable.

Saharsky called the delay request what it was: an effort to extend operations under conditions a court has already found unlawful. Blunt language in a legal filing usually means the author believes the court already agrees with them and is writing for the record, not to persuade.

The relevant standard here is whether agency rulemaking can cure a statutory interpretation adverse to an exchange seeking federal preemption of state gaming law. Under Chevron's diminished post-Loper Bright framework, courts owe agencies less deference on questions of major statutory scope than they did a decade ago. The CFTC's attempt to define its way to jurisdiction over sports contracts will meet that reduced deference at whatever circuit reviews it first.