regulation · "prediction markets" · "regulation" · "court ruling"
Kalshi Loses Bid to Restart Sports and Election Contracts in Nevada
The U.S. Court of Appeals for the Ninth Circuit refused to let Kalshi resume challenged event contracts in Nevada while litigation continues. The decision is consequential, but it is not a final nationwide ban on prediction markets.
Kalshi argued that its status as a federally regulated designated contract market displaced Nevada's state gaming rules. The appellate court was not persuaded that the company had shown a likelihood of success sufficient to restore the contracts through preliminary relief.
For sports-event contracts, the court concluded that Kalshi had not demonstrated that federal commodities law likely preempted Nevada's authority. The practical result is that Nevada may continue applying its gaming regime while the underlying case proceeds.
The opinion also addressed election-related contracts, but those claims require separate consideration rather than a broad conclusion that every event contract is governed identically.
A limit on the federal shield
The dispute is larger than one state's market. Prediction-market platforms have built their expansion strategy around the argument that federal derivatives oversight can provide a unified national framework.
Nevada's position is that contracts tied to sports outcomes can function as gambling products even when offered through a federally regulated venue. The Ninth Circuit's refusal to restore Kalshi's Nevada operations leaves that state-level challenge intact.
Blue Rogues interpretation: the ruling increases fragmentation risk. A platform may satisfy federal market rules yet still face state-by-state restrictions when its contracts overlap with traditional gaming categories. That uncertainty can constrain product availability, liquidity and the economics of national distribution.
What the ruling does not decide
The court did not declare all prediction markets illegal. It did not issue a final merits judgment covering every contract nationwide, and it did not erase federal jurisdiction over designated contract markets.
The next signals are the district-court proceedings, treatment of election contracts, any widening disagreement among federal circuits and whether the dispute reaches the Supreme Court.
For now, Nevada retains regulatory leverage and Kalshi's claimed federal shield remains incomplete.
Sources:
- https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf
- https://apnews.com/article/2168b6c0837ad9b4f0f63b04633d8835