It was the opinion heard ‘round the world by people obsessed with prediction markets.
- Nevada’s court victory over Kalshi is being cited by other states arguing that prediction markets' sports event contracts are really just sports bets subject to state gambling laws.
- Kalshi is also using parts of the ruling to support its position that federal law preempts state regulation.
- The conflicting appeals court decisions could nudge the growing legal fight over prediction markets closer to the U.S. Supreme Court.
Nevada’s triumph over Kalshi before the U.S. Court of Appeals for the Ninth Circuit last week has been much talked about among the followers of the long-running legal battles involving state gambling regulators and the federally regulated exchanges.
It’s also being talked about in other courts, in cases that also concern the legality of the sports-related event contracts offered by prediction markets.
“In short, the Court confirmed what Ohio has always argued: ‘everyone’ knows that ‘Kalshi’s sports event contracts are, in reality, sports bets,’ not swaps,” Ohio said in an additional citation to the U.S. Court of Appeals for the Sixth Circuit on Monday.
The 9th Circuit decision in Kalshi v. Assad makes its way to the 6th Circuit via the Ohio Solicitor General, who highlights CA9's analysis of the swap issue, lack of a limiting principal, no distinction between sports contracts and sports betting, and applicability of the MQD. pic.twitter.com/a4geroOWrw
— Daniel Wallach (@WALLACHLEGAL) August 31, 2026
Such citations happen. Iowa made a similar filing on Monday in its case against Kalshi, to “respectfully alert” the court to the Ninth Circuit opinion.
“In so holding, the Ninth Circuit found that (1) sports event contracts are not ‘swaps’ or ‘options’ under the [Commodity Exchange Act] and (2) state gambling laws were not preempted via express, conflict, or field preemption,” wrote Rhode Island in notifying its court on Friday. “This decision provides additional authority bearing directly on the issues presented to this Court and is respectfully submitted for the Court’s consideration.”
How the Ninth Circuit’s opinion lands with other courts remains to be seen. However, parts of the decision were also cited by Kalshi in other cases, and in support of the prediction market operator’s position.
“The Ninth Circuit agrees that ‘the [Commodity Exchange Act] expressly preempts state law regulating swaps ‘traded or executed on’ a [designated contract market],” Kalshi noted in a filing for its case involving Connecticut.
“Even the Ninth Circuit agreed that the CEA is ‘a comprehensive regulatory scheme’ that ‘preempts the field of regulating swaps traded on a DCM,’” Kalshi wrote in a filing to the U.S. Court of Appeals for the Tenth Circuit in connection with its case involving Utah.
However, another line of Kalshi’s filing in the Utah matter sticks out as well: “The courts of appeals are now openly divided on the merits.”
Paging SCOTUS
Kalshi pointed here to the fact that while the Ninth Circuit appeals court ruled against it, the Third Circuit appeals court did not in a case involving New Jersey.
The disagreement between the two courts of appeal has increased expectations for prediction market-related litigation to reach the Supreme Court. It is possible that New Jersey could petition SCOTUS for such a review later this week.
Whether the Supreme Court takes the case remains to be seen. In the meantime, the Ninth Circuit ruling will reverberate around the area of prediction market-related litigation.
Here is the conclusion of 44 states in their submission to the CFTC on the agency's proposed prediction market rules.
— Geoff Zochodne (@GeoffZochodne) July 28, 2026
In short, you can't do it, the rules are "in tension with the Constitution," and you should start over by saying sports betting is exclusively state turf. pic.twitter.com/qba65lDWe8
Those lawsuits typically involve a state going up against a prediction market operator such as Kalshi or up against the operator’s federal regulator, the Commodity Futures Trading Commission (CFTC), or both.
At issue is whether prediction markets' sports-related event contracts are subject solely to the regulation of the CFTC, or if state gambling laws apply. Prediction market operators believe the former, and are relying on it to offer sports event contracts for trading in states both with and without legalized sports betting.
However, according to many states, what’s on offer is just sports betting by another name, and should be stopped.
Forty-four states wrote to the CFTC in July and urged the regulator to “clarify that sports bets and gambling cannot be traded on DCMs but are instead subject to state law, which is not preempted by the CEA.”
