An appeals court’s next move could determine how quickly the U.S. Supreme Court steps into the nationwide fight over sports prediction markets, a prominent gaming attorney said Wednesday.
- The Ninth Circuit’s response to Kalshi’s rehearing petition could determine whether the Supreme Court intervenes soon or waits for more lower-court rulings.
- The Ninth Circuit cleared Nevada to enforce its gaming laws against Kalshi, creating a split with the Third Circuit’s protection of sports event contracts.
- A rehearing could delay Supreme Court review, while a denial could make the case more immediately available for review during the court’s October 2026-June 2027 term.
Kalshi asked the court in an “en banc” petition to reconsider its Aug. 28 ruling that cleared the way for Nevada to enforce its gaming laws against the company’s sports event contracts. Joshua Kirschner, a Holland & Knight partner and deputy leader of the firm’s National Gaming Team, said the decision could dictate whether the Supreme Court acts soon or allows the dispute to continue developing in lower courts.
“If the Ninth Circuit grants the motion for a rehearing en banc, I would put the odds of the Supreme Court (taking up the case) ... very, very low,” Kirschner told Covers.
If the Ninth Circuit refuses to reconsider the case, which appears to be the increasingly likely scenario, the Supreme Court would have two sharply conflicting appeals court decisions - and a clearer reason to intervene, Kirschner said.
“This is absolutely ripe,” Kirschner said. “You’ve got a proper, clearly delineated circuit split. You have an issue of public policy, national importance. It kind of has all the hallmarks you want in a Supreme Court case.”
Kalshi challenges major loss
The Ninth Circuit ruling was the prediction market industry’s most significant courtroom defeat to date.
The court upheld a lower court decision that removed Kalshi’s protection from Nevada enforcement. That could allow Nevada regulators to treat the company’s sports event contracts as illegal sports wagering rather than federally protected financial products.
The practical legal question is whether Kalshi and similar platforms can offer sports contracts nationwide under federal oversight or whether they must comply with each state’s gambling laws.
Kalshi argues the federal Commodity Futures Trading Commission (CFTC) is its primary regulator because the company operates a federally registered exchange, not a sportsbook. Nevada contends Kalshi is effectively offering sports betting without a state gaming license.
The San Francisco-based Ninth Circuit largely sided with Nevada. It concluded that event contracts tied to game results, point spreads and player performances more closely resemble wagers than the financial products Congress intended the CFTC to oversee.
The court also rejected the idea that Congress quietly displaced the state and tribal gambling systems that have governed sports betting for decades. If lawmakers intended to give the CFTC authority over a massive national gambling market by adjusting the federal Commodity Exchange Act, the justices wrote in their opinion, they would have done so more clearly.
“Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state and tribal governments when it amended the CEA,” Judge Ryan Nelson wrote in the majority opinion.
Kirschner said the court delivered a broad rejection of Kalshi’s position.
“It was a big hammer ... not a ball peen,” he said.
Another blow came Thursday when the Ninth Circuit ruled against prediction markets in a separate case involving Western Native American gaming tribes. Though it doesn't guarantee a decision on Kalshi's en banc appeal, a second ruling against sports event contracts reaffirms the court's hostility toward these platforms' legality claims and effectively diminishes chances justices will look to rehear a case.
"With the circuit split deepening and the Supreme Court petition process underway, the trajectory is increasingly toward either a national resolution at the Supreme Court or a prolonged period of jurisdictional fragmentation in which the prediction markets’ operating environments become progressively more constrained and the attendant risks heightened,” Kirschner said.
Enjoying Covers content? Add us as a preferred source on your Google account
Conflicting rulings create national divide
Kalshi’s Sept. 9 petition for rehearing argues the Ninth Circuit ruling conflicts with both federal law and an April decision from the Philadelphia-based Third Circuit.
That court blocked New Jersey from enforcing its gambling regulations against Kalshi’s sports event contracts. It found that sporting events can have real financial consequences for broadcasters, sponsors, franchises, stadium operators, and other businesses.
Kalshi told the Ninth Circuit that its ruling contains another important contradiction. The decision says sports contracts generally fall outside the category of products the CFTC oversees, but federal law also gives the agency authority to decide whether certain contracts involving gaming should be prohibited.
The conflicting decisions create an uneven legal landscape. Kalshi has stronger protection from state enforcement in Eastern, Third Circuit states but faces a much less favorable standard across the Ninth Circuit, which encompasses Nevada, California, and several other Western states.
The disagreement could increase the likelihood of Supreme Court review. The justices frequently wait for federal appeals courts to reach opposing conclusions before settling a national legal question.
Ninth Circuit Judge Kenneth Lee identified that tension in a concurring opinion. He agreed with the result but wrote that the CFTC’s authority over gaming-related contracts “gives me pause.”
The distinction matters because the CFTC is considering new rules that would review sports event contracts individually rather than automatically treating every gaming-related product the same way.
“The decision likewise fails to explain how the Special Rule’s grant of authority to the CFTC to approve or bar contracts involving ‘gaming’ could be consistent with allowing states to regulate the very same instruments,” Kalshi wrote in its petition.
Decision could affect immediate enforcement
A rehearing could delay the full effect of the Ninth Circuit decision, giving Kalshi additional time before Nevada or other states attempt to enforce their laws against the company.
If the Ninth Circuit agrees to reconsider the case, the Supreme Court could wait for the larger appellate panel to rule. That would extend the legal uncertainty but could give the justices a more complete decision to review later.
The justices could still wait for additional rulings from the Fourth and Sixth circuits, both of which are considering similar prediction market-related legal cases.
But a denial in the Ninth Circuit for Kalshi’s en banc hearing could accelerate the process. The Supreme Court would then have a clear split between two federal appeals courts even as related cases continue in other parts of the country.
The Supreme Court’s upcoming session begins with hearings in October 2026 and ends with decision releases in June 2027. If the court doesn’t take up the case by the end of 2026, it could mean at least another full year before any action would be taken - if a move is undertaken at all.
Kirschner cautioned that the Supreme Court accepts only a small portion of the cases presented to it. But he said the combination of two conflicting circuit court rulings and the possibility of two more - along with growing regulatory uncertainty and state enforcement potential - could make it difficult for the Supreme Court to remain on the sidelines.
“I don’t think you’re going to get (rulings) from the Third and the Ninth, the Supreme Court deny both, and then you wait for the Fourth and the Sixth,” Kirschner said. “That seems kind of superfluous and a recipe for creating all sorts of disaster in the interim.”
