Kalshi seeks en banc review as Supreme Court petitions multiply

Three separate legal filings landed in federal courts inside a single week, and the question none of them can answer is the same one: whether a contract that pays out on a football score is a swap or a bet.

Kalshi's petition for en banc review at the Ninth Circuit is the one that matters most right now, and not because it is likely to succeed. En banc rehearings are granted sparingly. The Ninth Circuit panel that ruled against Kalshi did so unanimously, holding that sports-event contracts are not swaps under the Commodity Exchange Act and therefore not shielded from Nevada's gaming regulations. Kalshi's argument — that the panel created a circuit split through internally inconsistent reasoning — is a real argument, but it is the argument you make when you need time and a second look, not when you expect the first look to reverse.

The more consequential filings came from Robinhood and Crypto.com, which petitioned the Supreme Court directly for certiorari. Both companies have suspended sports contracts for their Nevada users while the petition sits on the docket. Justin Wales, Crypto.com's chief legal officer, framed the filing as a request for clarity on regulatory jurisdiction. What he did not say, but what the structure of the filing implies, is that the industry has concluded the Ninth Circuit is not going to give them what they need. The Supreme Court petition is the exit from a circuit that ruled against you.

Here is where I part from the consensus reading of this litigation pile-up. The industry and its analysts are treating the Third Circuit's May ruling — two to one in Kalshi's favor, blocking New Jersey's cease-and-desist — as the foundation for a cert grant. The split between the Third and Ninth Circuits is real, and the Supreme Court does take circuit splits seriously. But a split alone is not enough when one side of the split rested on a two-to-one panel decision with a dissent that read the contracts as indistinguishable from traditional sports betting. Judge Roth's dissent in the Third Circuit is the argument that Connecticut, Nevada, New Jersey, and every other state regulator is now making in their own proceedings. The Supreme Court does not resolve circuit splits to validate the losing side's reasoning.

Connecticut's enforcement action reinforces this. Nine cease-and-desist orders, a federal district judge in the state already ruling that sports-event contracts constitute illegal unlicensed gambling, and a governor who has framed this as consumer protection rather than jurisdictional theory. Connecticut is not a state that stumbled into this position. The August federal ruling it is relying on is the exact counter-weight to the Third Circuit's May ruling, and it was issued by a judge inside the same federal system Kalshi is now asking to save it.

I have watched preemption arguments that looked structurally sound get dismantled when the underlying product looked, to a non-specialist court, like something the state had every reason to regulate. The CEA's jurisdictional scope is genuinely broad. It is not infinitely elastic. A contract whose resolution depends entirely on the outcome of an NFL game is going to have a harder time claiming swap status before a Supreme Court that does not approach this with CFTC deference baked in.