Kalshi settles Montana suit as Ninth Circuit ruling holds

A settlement between Kalshi and the Montana Attorney General's office, structured to remain subordinate to whatever the Ninth Circuit ultimately decides, is the clearest signal yet that the more consequential legal work in this regulatory fight is happening in federal appeals courts rather than in the enforcement offices of individual states.

The structure of the Montana agreement matters. By building the Ninth Circuit's eventual opinion directly into the settlement's terms, both sides acknowledged something that state enforcement actions rarely admit openly: the jurisdictional question underneath all of this has not been resolved, and no bilateral agreement between a platform and a state attorney general can resolve it. Montana stepped back. It did not concede.

That distinction will be tested wherever similar enforcement pauses are in effect. A state that pauses is not a state that has decided. And the Ninth Circuit, which has already been handling the tribal land question with the Indian Gaming Regulatory Act as its frame, is now the institution that effectively sets the ceiling for what state AGs can do unilaterally. The Montana settlement doesn't confirm federal preemption — it defers to the court that will.

What the settlement does clarify is how far Kalshi is willing to let state proceedings run before offering a structured exit. Montana got movement without a full fight. That is worth watching as Missouri presses forward with its own action, because Missouri has shown no appetite for the same accommodation. The Missouri attorney general's posture has been more aggressive, and if the Ninth Circuit's eventual opinion is narrow — tied to IGRA rather than broad preemption — Missouri may find itself with more room to operate than Montana ever used.

I disagree with the reading that the Montana settlement represents a template the industry can replicate across hostile state jurisdictions. The settlement works because Montana's legal position was uncertain enough that both sides had reason to hold. Missouri's position, as reported, is not in the same posture. The AGs in states with active sports betting compacts and tribal arrangements have a richer legal foundation to work from than Montana did, and the IGRA framing that produced the tribal injunction on Ninth Circuit grounds does not automatically travel to states where tribal gaming is not the central fact pattern.

The standard a reviewing court applies when a state enforcement action claims a federal license does not preempt local gambling law is whether the federal authorization is sufficiently explicit to displace the state's traditional police powers in this area. Dodd-Frank's amendments to the Commodity Exchange Act extended CFTC jurisdiction over event contracts, but the statute's silence on state gambling authority is not the same as displacement. The Ninth Circuit, and eventually any circuit that takes this question, will have to determine whether Congress spoke clearly enough.