A federal appeals court in San Francisco has ruled that popular prediction market Kalshi can’t keep Nevada gaming regulators from overseeing its platform, contradicting an appeals ruling in Philadelphia and setting the stage for a potential U.S. Supreme Court review.
The 9th U.S. Circuit Court of Appeals in San Francisco said Kalshi was unlikely to show that the federal Commodity Exchange Act pre-empted Nevada from requiring a gaming license to offer contracts that let people bet on the outcomes of sporting events.
The ruling, issued Friday, contradicts a 3rd U.S. Circuit Court of Appeals ruling in Philadelphia on April 6 that said in a split decision that New Jersey can’t regulate Kalshi’s platform.
Representatives of New York-based Kalshi said they would seek further review of the decision.
“The Ninth Circuit agreed with the Third Circuit on a fundamental point: Federal law prevents states from regulating trading on a federally licensed exchange, like Kalshi,” company representative Dani Lever said late Friday. “Despite the Ninth Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations. We will be seeking further review.”
In the meantime, trading on sports, entertainment and elections contracts are blocked in Nevada, Kalshi has said, although Gaming Control Board agents say they have been able to continue to access the site in the state and regulators are asking a Carson City court to find Kalshi in contempt and impose the $120,000 daily penalty against the company that it earlier ordered.
$120K daily penalty sought
The $120,000 penalty was ordered if Kalshi failed to geofence operations and make itself unavailable to Nevada consumers. Kalshi says it has complied, but the Control Board disagrees.
Nevada gaming regulators commented that they were happy with the court’s ruling.
“We are pleased with the Ninth Circuit’s ruling today in favor of Nevada,” Gaming Control Board Chairman Mike Dreitzer said. “This completely vindicates what we have been saying all along. This is sports betting and needs to be properly regulated by the state. The Nevada Gaming Control Board has been regulating gaming in the state of Nevada for more than 70 years in accordance with the highest standards and best practices. We will continue to vigorously enforce Nevada law to safeguard gaming in our state.”
‘Decisive action’
Dreitzer said the board has taken decisive action in recent months to halt the operations of other prediction markets in the state and has successfully restricted the operation of the unlicensed markets that had been known to be operating in Nevada.
“Prediction markets offering sports-event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework,” Gov. Joe Lombardo said in a Friday emailed statement. “I commend Chairman Dreitzer and the Nevada Gaming Control Board for their diligent work to uphold Nevada’s longstanding regulatory standards, safeguard the integrity of our gaming industry and ensure the public can continue to have confidence in its oversight,” he said.
Kalshi and other prediction markets first appeared on Nevada’s radar nearly two years ago when November elections occurred. Then, in March 2025, Kalshi and the Control Board sued each other in federal court. Eventually, the Control Board determined they’d have better success arguing in state District Courts.
Court fights nationwide
Meanwhile, Kalshi began engaging in court fights in states across the country that offered gambling.
The company maintains that prediction markets fall exclusively under federal jurisdiction and are not governed by a patchwork of state gambling laws. The Commodity Futures Trading Commission, the federal agency responsible for regulating financial markets, agrees and has defended prediction markets in court.
The Associated Press has reported that courts in Maryland, Nevada, Ohio, New York and Wisconsin have ruled against Kalshi in similar lawsuits, while judges in New Jersey, Tennessee, Arizona and Minnesota have sided with the company. Other states have been allowed to restrict certain aspects of Kalshi’s operations without banning them entirely.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.
