Layer 1: The Reportable Facts

The Ninth Circuit issued its published opinion in KalshiEX, LLC v. Assad on August 28, 2026. The case arose after the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter saying the company was operating a sports-betting platform without complying with Nevada gaming law. Kalshi argued it was not running a sportsbook but a CFTC-regulated designated contract market offering lawful event contracts. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

The panel affirmed in part the district court’s order dissolving Kalshi’s preliminary injunction against Nevada. It held that Kalshi had not shown a likelihood that the Commodity Exchange Act preempts Nevada gaming regulations as applied to sports-event contracts. The court also remanded the election-contract issue, meaning the sports holding did not finally resolve how Nevada’s challenge to political-event products should be handled. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

The opinion’s crucial statutory holding was that Kalshi’s sports-event contracts were not swaps under the CEA definition because they were sports bets. The panel noted that Kalshi’s sports products included markets tied to winners, draft outcomes, halftime-show details, prop-style outcomes, over-unders, spreads, and linked trades resembling parlays; it also cited record findings that sports-related trades made up more than 90 percent of Kalshi’s trades in 2025 and 95 percent of its revenue. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

The Ninth Circuit’s ruling directly conflicts with the Third Circuit’s April 6, 2026 decision in KalshiEX v. Flaherty. There, a divided Third Circuit affirmed preliminary relief against New Jersey regulators after concluding Kalshi had shown a reasonable chance of proving that federal law preempts otherwise applicable state gambling law for sports-related event contracts on a CFTC-licensed designated contract market. ([www2.ca3.uscourts.gov](https://www2.ca3.uscourts.gov/opinarch/251922p.pdf))

Independent reports confirmed the stakes. NOTUS described the Ninth Circuit decision as opening the door to state-by-state regulation of prediction-market platforms, while Bloomberg Law reported that the decision creates a circuit split and that the Ninth Circuit also issued unpublished decisions involving Crypto.com and Robinhood derivatives entities. ([notus.org](https://www.notus.org/courts/ninth-circuit-ruling-prediction-market-websites-state-regulation))

Layer 2: The System Read

Verified fact: the Ninth Circuit did not merely say Nevada can enforce a local licensing rule. It narrowed the federal hook that prediction-market operators rely on by rejecting the idea that these sports contracts qualify as swaps. That pushes at least one major class of event contracts out of a uniform federal derivatives frame and back toward the older state-police-power frame for gambling. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

Inference: this is why the case belongs in the information-ecosystem lane, not only the gambling lane. Prediction markets convert uncertainty into tradable, price-like signals. If those signals are treated as financial derivatives, the CFTC becomes the central gatekeeper. If they are treated as gambling, states regain the power to fragment access, licensing, consumer protections, advertising rules, and permitted subject matter.

The sports category is also a strategic test case. Sports outcomes are the easiest contracts for state regulators to characterize as betting, because the consumer use case closely resembles sportsbook activity. But the same infrastructure can price elections, policy decisions, economic releases, wars, celebrity outcomes, platform behavior, and public narratives. The fight over sports therefore becomes a proxy for who controls markets that monetize public forecasts.

The Ninth Circuit leaned on federalism and major-questions logic, warning against reading Dodd-Frank as a quiet transfer of national gambling authority to the CFTC. That is a broader institutional signal: courts may be skeptical when platforms use financial-market registration to bypass state regimes in areas historically controlled by state or tribal gambling regulators. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

Layer 3: What To Watch Next

First, watch the Supreme Court track. With the Third Circuit and Ninth Circuit now pointing in opposite directions, platforms and state regulators lack a stable national rule. Bloomberg Law reported that the split is likely to draw high-court attention, and NOTUS reported that the ruling is expected to be appealed. ([news.bloomberglaw.com](https://news.bloomberglaw.com/securities-law/kalshi-takes-hit-as-appeals-court-says-sports-bets-arent-swaps))

Second, watch the election-contract remand. The Ninth Circuit separated sports from elections, leaving the district court to analyze Nevada’s election-contract challenge under the opinion’s framework. That is the next pressure point because election markets raise a different mix of derivatives law, speech, campaign-integrity, and information-manipulation concerns.

Third, watch the CFTC. The panel emphasized that existing CFTC regulation bars certain event contracts involving gaming, while the industry argues that CFTC-supervised markets should be treated as federal venues. If the CFTC changes or clarifies its event-contract rules, that could reshape the litigation posture, but it may also intensify the major-questions and federalism objections identified by the Ninth Circuit. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

Fourth, watch state coalitions and platform design. Bloomberg Law reported parallel Ninth Circuit outcomes involving Crypto.com and Robinhood derivatives cases, and the Ninth Circuit record shows broad state and tribal interest in preserving gambling authority. The practical question is whether platforms geo-fence, seek state gambling licenses, narrow sports products, or keep pushing for a single federal market model. ([cdn.ca9.uscourts.gov](https://cdn.ca9.uscourts.gov/datastore/opinions/2026/08/28/25-7516.pdf))

Conclusion

The Ninth Circuit has not ended prediction markets. It has made their regulatory map more unstable. Kalshi’s sports contracts can be federally listed in one circuit’s logic and state-regulated gambling in another’s, which is exactly the kind of split platform markets try to avoid. Until the Supreme Court, Congress, or the CFTC supplies a clearer rule, the future of monetized forecasts will be fought contract by contract, state by state, and category by category.