Kalshi just lost a big one. The US Court of Appeals for the Ninth Circuit ruled unanimously against the prediction market platform, dissolving a preliminary injunction that had previously kept Nevada’s gaming regulators at bay. The 3-0 decision in KalshiEX, LLC v. Assad means states can now move forward with enforcement actions against Kalshi’s sports event contracts.
The core question was deceptively simple: does Kalshi’s status as a CFTC-registered designated contract market make it immune to state gambling laws? The Ninth Circuit’s answer, delivered on August 28, 2026, was a firm no.
Federal shield, meet state sword
Kalshi’s argument rested on what seemed like solid ground. The company is registered with the Commodity Futures Trading Commission as a designated contract market, or DCM. Under the Commodity Exchange Act, the CFTC holds exclusive jurisdiction over futures and event contracts. Kalshi argued this federal framework should preempt state-level gaming regulations.
The Ninth Circuit found that Kalshi failed to demonstrate that the CEA actually preempts Nevada’s gaming regulations when it comes to sports event contracts. This wasn’t a snap judgment either. The case had been working its way through the system for months, with an oral argument held on April 16, 2026. The Ninth Circuit had already signaled its skepticism back in February 2026 when it denied Kalshi’s request for a stay that would have blocked state enforcement during the appeal.
Sports contracts blocked, election contracts in limbo
The ruling creates a split outcome for Kalshi’s product lineup. Sports event contracts are now clearly vulnerable to state gambling enforcement in jurisdictions within the Ninth Circuit’s territory. Election contracts got a different treatment. The Ninth Circuit remanded questions about the legality of those contracts back to the district court for further consideration.
What comes next
Kalshi has a few options. The company could petition for rehearing en banc, asking a larger panel of Ninth Circuit judges to reconsider the three-judge panel’s decision. It could also seek Supreme Court review, or focus its energy on the remanded election contract question at the district court level.
The Ninth Circuit’s unanimous decision also carries weight precisely because it was unanimous. A 3-0 vote leaves no dissent for Kalshi to build a rehearing argument around. For a company that has staked its future on the premise that federal registration trumps state regulation, that consensus is a particularly difficult pill to swallow.