The future of sports prediction markets in the United States entered a new phase on August 28, 2026, when the U.S. Court of Appeals for the Ninth Circuit unanimously ruled against KalshiEX LLC and backed Nevada’s authority to apply state gambling laws to certain sports event contracts. The panel, composed of Judges Ryan D. Nelson, Bridget S. Bade and Kenneth K. Lee, found that Kalshi had failed to demonstrate that the Commodity Exchange Act (CEA) displaced state regulation over products that, in practice, function as sports bets.
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The lead opinion, written by Ryan Nelson, held that Kalshi’s attempt to characterize its contracts as federally regulated financial instruments rather than sports betting amounted to a “distinction without a difference.”
The case, KalshiEX, LLC v. Assad et al., No. 25-7516, was argued on April 16, 2026 in San Francisco. The court confirmed that Nevada may act against sports contracts and remanded the dispute over election event contracts to the District Court.
Judge Bridget S. Bade
The conflict began on March 4, 2025, when the Nevada Gaming Control Board (NGCB) sent Kalshi a cease-and-desist letter. The company initially secured a preliminary injunction on April 9, 2025 before federal Judge Andrew P. Gordon, but that protection was later dissolved. On July 24, 2026, Nevada also announced the shutdown of Kalshi’s sports prediction-market business in the state.
Mike Dreitzer
The state regulator is chaired by Mike Dreitzer, Chairman of the NGCB, while the Nevada Gaming Commission is headed by Jennifer Togliatti. At the federal level, Kalshi operates as a Designated Contract Market under the supervision of the Commodity Futures Trading Commission (CFTC), chaired by Michael S. Selig.
George Santos
The regulatory battle remains open. On June 10, 2026, the CFTC proposed changes to Regulation 40.11 that would more clearly define “gaming,” establish public-interest factors and create 90-day review procedures for event contracts. Judge Kenneth Lee, in a separate concurrence, left open the possibility that a future regulatory interpretation could alter the legal landscape.
Kalshi is also moving to strengthen its internal credibility. On August 31, it fined former congressman George Santos US$71,356 and imposed the first lifetime ban in company history for trading on a contract tied to his own attendance at the February 24, 2026 State of the Union. The CFTC had already sanctioned him on July 31, ordering US$17,569.98 in disgorgement, a US$17,500 civil penalty and a three-year trading ban.
