Daniel Mercer
The 9th U.S. Circuit Court of Appeals has determined that Nevada has the authority to prohibit the prediction market platform Kalshi from operating within its borders.
In March 2025, the Nevada Gaming Control Board issued a cease-and-desist letter to Kalshi, asserting that the platform was functioning as a sports betting service in violation of Nevada’s gaming laws.
Kalshi contested this claim, asserting that it is a “designated contract market” (DCM) that provides legal contracts for sports events, commonly referred to as “swaps.” However, the company’s own promotional materials described Kalshi as “the first app for legal sports betting in all 50 states,” a statement referenced in the court’s ruling.
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Judge Ryan D. Nelson stated in the opinion, “The essence of the sports event contracts offered on Kalshi’s DCM constitutes sports gambling, regardless of Kalshi’s classification of them as swaps.”
The unanimous 3-0 decision poses significant challenges for Kalshi and other prediction market platforms that enable users to gamble on sports events.
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Mike Dreitzer, Chairman of the Nevada Gaming Control Board, expressed satisfaction with the ruling, stating, “This completely validates our longstanding position. This is sports betting and must be regulated appropriately by the state.”
Dani Lever, spokesperson for Kalshi, indicated that the company intends to pursue further legal review, according to the Nevada Independent.
The core issue revolves around whether the Commodity Exchange Act (CEA), a federal statute governing commodity futures trading, supersedes state gaming regulations in the context of swaps, as argued by Kalshi.
The 9th U.S. Circuit Court of Appeals concluded that the CEA does not preempt state regulation. a previous ruling from Philadelphia’s Third Circuit supported Kalshi’s stance.
Zach Fulton, a representative for the Commodity Futures Trading Commission, the federal body regulating the industry, told the New York Times that the 9th Circuit’s decision was flawed.
He remarked, “The Ninth Circuit has now created a circuit split that necessitates resolution by the Supreme Court.”
Ethan Carter
