Home / Play / Ninth Circuit's decision in Kalshi v. Assad bears substantial ramifications for sports event contract trading on prediction markets

Ninth Circuit's decision in Kalshi v. Assad bears substantial ramifications for sports event contract trading on prediction markets

Derek Helling

Legal Writer

Publish Date: Aug 31, 2026

Fact checked by: Matt Moreno

Key Points

Ninth Circuit issued opinion that the district court correctly dissolved a preexisting injunction against Nevada officials
Opinion remands dispute over Nevada gaming regulators’ authority over elections event contract trading back to district court
Decision is the most consequential for prediction markets in the United States since April

The circuit split over the legal parameters of event contract trading related to sports on prediction markets across the United States has never been clearer after the US Ninth Circuit Court of Appeals issued an opinion in Kalshi v. Assad et al. on Friday. The ruling puts the Ninth at odds with the Third Circuit Court of Appeals on several legal questions related to sports event contract trading.

The ramifications of the Ninth’s action are greater than potentially pushing Kalshi to petition the US Supreme Court, though. The decision could embolden gambling regulators and law enforcement plus color the outcomes of other litigation across the country.

(Photo by Karl-Josef Hildenbrand/picture alliance via Getty Images)

Ninth Circuit says sports event contracts trading is gambling

The Aug. 28 opinion from a three-member panel of the Ninth Circuit leaves no ambiguity in its reading of the statutes in question.

“However, under the CEA’s definition in § 1a(47)(A)(ii), the sports event contracts were not ‘swaps’ because they were sports bets. In addition, the Special Rule in § 7a-2(c) did not establish that Congress intended the CFTC to make a public interest determination regarding swaps and event contracts involving ‘gaming’ because Kalshi’s self-certification and listing of the contracts was unlawful under the Special Rule and its associated regulation, 17 C.F.R. § 40.11.”

The opinion has two immediate legal effects. The first is an immediate win for the defendants while the other could expand on that victory.

Short-term implications of opinion

The ruling immediately clears the way for Nevada officials to enforce the state’s gambling laws against prediction market exchange operators offering sports event contracts to people in Nevada. Nevada law restricts sports wagering to casinos and online operators that are licensed by the Nevada Gaming Control Board.

The Ninth Circuit did not decide whether or not Nevada officials can wield similar authority over event contract trading related to elections, though. It deferred that deliberation back to the US District Court for the District of Nevada.

As a result, Kalshi has missed its chance to evade the geofencing order that a Nevada state court has imposed upon sports event contract trading. While Kalshi has legal recourse, that will be the status quo for the foreseeable future.

Kalshi on the Supreme Court’s doorstep

With the Ninth ruling on the injunction in Kalshi v. Assad, Kalshi’s only recourse remaining on that issue is the US Supreme Court. Kalshi has had prior opportunities to file a petition for review with that court but has opted not to.

This may be the opportunity that Kalshi can’t pass on, though. The Ninth’s opinion gives a state government the authority to determine which of its markets it can offer within that state’s borders.

It also defines sports event contract trading as gambling and leaves the door open for a ruling that election event contracts violate Nevada law. The precedents and prominence of those contract categories are the reasons for the seriousness of that situation for Kalshi.

Long-term implications of Ninth Circuit’s ruling for Kalshi

The conflict of the Ninth Circuit’s decision on the nature of sports event contract trading stands at odds with the Third Circuit’s reading of the same statutes in that regard. A panel from that court ruled in April that activity qualifies as swapping under federal law.

A split this clear from disparate circuit courts is usually fodder for a Supreme Court review. However, the timing could prove crucial.

Similar cases are currently before the Second Circuit, Fourth Circuit, Sixth Circuit, and Eighth Circuit. If those cases all break against sports event contracts as “swaps,” then that reduces the Third Circuit’s ruling to outlier status.

Those courts could now look to the Ninth Circuit’s opinion as precedent and use it to justify similar rulings. The Ninth Circuit’s ruling could also give gambling regulators and law enforcement in other states beyond Nevada more confidence in enforcing their own gambling laws against sports event contract trading, too.

The bottom line for the moment is that the Ninth Circuit “panel concluded that the CEA (Commodity Exchange Act) likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts.” That ruling could be the beginning of the end for such transactions across the US.

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