The Ninth Circuit Court of Appeals has ruled on a significant case involving KalshiEX, LLC, a sports betting platform, and the Nevada Gaming Control Board. The court's decision, filed on August 28, 2026, affects how KalshiEX operates in Nevada and its relationship with state gaming regulations. This ruling is crucial for the future of sports betting and regulatory authority in the United States.
KalshiEX, which claims to be the first app for legal sports betting in all 50 states, found itself in a legal battle after the Nevada Gaming Control Board issued a cease-and-desist letter. The Board stated that KalshiEX was violating state gaming laws by operating as an unlicensed sports pool. The court's ruling clarifies the extent of federal and state authority over sports betting platforms and their contracts.
Background
The dispute began when KalshiEX, a designated contract market (DCM) under the Commodity Exchange Act (CEA), started offering sports event contracts. These contracts allow users to bet on various outcomes related to sports events. The Nevada Gaming Control Board contended that these contracts constituted illegal sports betting under state law.
In response to the Board's cease-and-desist order, KalshiEX filed a lawsuit seeking a preliminary injunction to prevent Nevada from enforcing its gaming regulations against the platform. KalshiEX argued that it was not operating a sports betting platform but rather offering legal contracts regulated by the Commodity Futures Trading Commission (CFTC). The case eventually reached the Ninth Circuit after the district court initially granted KalshiEX a preliminary injunction.
The Ruling
The Ninth Circuit affirmed in part the district court's decision to dissolve the preliminary injunction against the Nevada Gaming Control Board. The court ruled that KalshiEX did not demonstrate a likelihood that the CEA preempts state gaming regulations as applied to its sports event contracts. The court stated, "Kalshi has not shown a likelihood that the CEA preempts Nevada’s gaming regulations as applied to its sports event contracts."
The ruling emphasized that KalshiEX's sports event contracts do not qualify as swaps under the CEA's definition. The court noted that while the CEA grants exclusive jurisdiction to the CFTC over certain transactions, KalshiEX's contracts were not classified as swaps, as they were based on the outcomes of sporting events rather than the occurrence of events tied to financial consequences.
Impact
This ruling has significant implications for the future of sports betting in the United States. By affirming the district court's decision, the Ninth Circuit has reinforced the authority of state gaming regulations over platforms like KalshiEX. This decision clarifies that federal law does not preempt state laws regarding sports betting, allowing states to enforce their regulations.
The ruling also highlights the ongoing tension between state and federal regulatory frameworks in the rapidly evolving landscape of sports betting. It sets a precedent that could influence similar cases across the country as more states grapple with the legality and regulation of sports betting platforms.
What's Next
KalshiEX may consider further legal options, including an appeal to the U.S. Supreme Court, although details on potential appeals were not available in the court filing. Additionally, related cases are pending in other jurisdictions, which could further shape the legal landscape for sports betting.