Ninth Circuit backs Nevada in unanimous ruling against Kalshi

A three-judge panel of the Ninth Circuit Court of Appeals ruled Friday that Kalshi is not entitled to an injunction blocking Nevada gaming regulators from overseeing its sports event contracts. The vote was unanimous. The court found that Kalshi had not demonstrated a likelihood that the Commodity Exchange Act preempts Nevada's gaming regulations as applied to those contracts, which meant the district court had not abused its discretion when it dissolved the preliminary injunction Kalshi had originally obtained.

Kalshi's argument, stripped to its core, was that CFTC jurisdiction under the CEA is exclusive — that once a contract is designated as a CFTC-regulated event contract, state gaming law simply has no field to operate in. The Ninth Circuit disagreed, at least at the threshold showing required for injunctive relief. The panel's framing matters: it did not rule that CEA preemption is impossible, only that Kalshi had not made the case likely enough to justify blocking Nevada's enforcement while the litigation continues. That is a meaningful distinction, and one that tends to get lost in how these rulings get characterized.

The preemption question under the Commodity Exchange Act has never been simple. The CEA does contain express preemption language, and the CFTC has taken the position — in guidance and in its emergency orders — that federal authority over designated contract markets is not subject to state override. What the Ninth Circuit appears to have concluded, at least for the purpose of this motion, is that sports event contracts occupy a sufficiently different category. Whether that distinction holds at the merits stage is not settled by Friday's ruling.

The American Gaming Association called the decision a win for consumer protection and state sovereignty. That framing is not wrong, but it is also not complete. What Nevada demonstrated is that a state gaming regulator can survive a preemption challenge long enough to keep imposing fines while the case develops. The $120,000 daily fine that Nevada had in play now has a cleaner runway.

The circuit split this creates — or deepens — is the structural problem that the Supreme Court will eventually have to resolve. The Second Circuit's treatment of federal preemption in the New York litigation has moved in a different direction than what the Ninth Circuit signaled Friday. Two circuits, two readings of the same statute, applied to contracts that are in some respects legally identical. Kalshi now faces regulatory enforcement in Nevada that a federal court has declined to stop, while simultaneously arguing in other jurisdictions that the federal framework controls everything.