Ninth Circuit denies Kalshi rehearing in Nevada case, leaving state enforcement path open

Kalshi has lost another round in its legal fight over sports event contracts. The US Court of Appeals for the Ninth Circuit has refused the company's request to rehear its Nevada case, which leaves in place a ruling that lets state gaming regulators take enforcement action against the operator.

The decision was unanimous. The court turned down both a panel rehearing and a rehearing en banc, which would have sent the dispute to the full appeals court. According to the report, no judge asked for a vote on whether the full court should consider the matter. Kalshi now has 90 days to petition the US Supreme Court for review. Its lawyer is Paul Clement, and the company could also try to coordinate its appeal with separate litigation pending before the Third Circuit.

The ruling follows an earlier Ninth Circuit decision that upheld the dissolution of a preliminary injunction that had shielded Kalshi from Nevada enforcement. In that decision the court found that the sports event contracts Kalshi lists do not count as swaps under the definition in the Commodity Exchange Act. As a result, the company cannot rely on federal derivatives law to protect those contracts from state gambling rules.

In a 78-page petition, Kalshi argued that the ruling exposes it to civil and criminal liability even though it operates under the supervision of the Commodity Futures Trading Commission. Its brief said that, although Congress gave the CFTC exclusive jurisdiction over instruments traded on designated contract markets, the panel held that states may still regulate sports event contracts the agency has allowed to trade. The central question is whether sports-linked prediction market contracts fall solely under federal oversight or can also be regulated as gambling by individual states.

The day before, on November 3, the Second Circuit denied Kalshi's request to temporarily stop New York and Connecticut officials from enforcing gambling laws against such contracts.

The litigation is moving alongside federal rulemaking. On October 9 the CFTC issued a Notice of Proposed Rulemaking and an Interim Final Rule meant to clarify its jurisdiction over event contracts, including sports-related ones. Public comments are due November 18. Kalshi could gain by waiting for that process to progress before seeking Supreme Court review, but for now its Nevada dispute remains unresolved and no injunction blocks state enforcement.