Ninth Circuit finds the CEA likely does not preempt Nevada gaming law as applied to Kalshi's sports contracts
On 28 August 2026 a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit affirmed in part a Nevada district court's order dissolving the preliminary injunction that had shielded KalshiEX, LLC from state gaming enforcement, in KalshiEX, LLC v. Assad (No. 25-7516). The dispute began in March 2025, when the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter characterising its sports event contracts as an unlicensed 'sports pool' under state law. Kalshi countered that it is a CFTC-registered designated contract market offering 'swaps' over which the Commodity Exchange Act gives the CFTC exclusive jurisdiction, so Nevada's rules do not reach it. Writing for the panel, Judge R. Nelson held that Kalshi had not shown a likelihood that the CEA preempts Nevada's gaming regulations as applied to those contracts, concluding that they are, in the court's characterisation, sports bets rather than statutory swaps.
The ruling opens a conflict among the federal courts of appeals. In April 2026 a divided Third Circuit panel, in KalshiEX, LLC v. Flaherty, affirmed a New Jersey injunction in Kalshi's favour, holding 2-1 that its sports event contracts are swaps and that the CEA preempts New Jersey's gaming laws as applied, on both field and conflict grounds; the Ninth Circuit has now reached the opposite result on the same question, reading the statutory definition of 'swap' narrowly and finding no preemption as applied. A split of this kind — two circuits deciding the same federal question differently — is the ordinary route by which an issue reaches the Supreme Court, though whether the Court would take it up is not established. Both rulings arise at the preliminary-injunction stage and turn on likelihood of success rather than a final judgment; a Fourth Circuit appeal and several district-court cases remain pending.
Two features of the ruling are worth drawing out. The panel rested its gaming analysis on 17 C.F.R. § 40.11(a) — the CFTC rule barring a registered entity from listing contracts that involve gaming — while treating the CFTC's pending proposal to amend that same rule as legally irrelevant, on the principle that proposed regulations have no legal effect. The court thus leaned on a provision the agency is itself in the process of rewriting. In a concurrence, Judge Lee agreed with the outcome but observed that the statute's 'Special Rule' appears to give the CFTC discretion over whether to ban gaming contracts at all, so the statute may not categorically bar them — a question he left open because § 40.11 currently does. The panel remanded for the district court to consider Nevada's challenges to Kalshi's separate election contracts, so the litigation is not over.