A federal appeals court handed prediction market company Kalshi a major legal defeat on August 29, 2026, ruling that Nevada can enforce its gambling laws against the platform's sports-related event contracts.
The decision came from a three-judge panel of the US Court of Appeals for the 9th Circuit. All three judges were appointed by President Trump, and all three ruled against Kalshi unanimously, according to a report by Ars Technica.
The central legal question was whether sports bets placed on Kalshi's platform qualify as swaps under the federal Commodity Exchange Act. If they did, the Commodity Futures Trading Commission would have exclusive regulatory authority over them, and state gambling laws would not apply. The court found that they do not.
Judge Ryan Nelson wrote in the decision that Kalshi advertises itself as "the first app for legal sports betting in all 50 states." As the platform's sports betting activity grew, the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter. Kalshi sought to block the state from enforcing its laws, arguing it was not a sports betting platform but a federally regulated contract market.
The 9th Circuit rejected that argument and affirmed a district court order allowing Nevada to enforce its laws against Kalshi.
The Nevada Gaming Control Board said the court emphatically rejected the view that federal law overrides Nevada's gaming statutes when it comes to sports-event contracts offered by Kalshi, Crypto.com, and Robinhood. Nevada Governor Joe Lombardo, a Republican, said that "prediction markets offering sports-event contracts constitute gambling and must comply with Nevada's gaming laws and regulatory framework."
The ruling creates a conflict with a 3rd Circuit decision that went the other way, finding that sports wagers on prediction markets do qualify as swaps. That circuit split makes it more likely the Supreme Court will eventually take up the issue.
The Trump administration has been working to help prediction markets avoid state regulation, making the unanimous ruling from three Trump-appointed judges a notable outcome for both the prediction market industry and state gambling regulators watching the case closely.