Ninth Circuit Declines to Rehear Kalshi's Nevada Sports-Contract Case

The U.S. Court of Appeals for the Ninth Circuit has refused Kalshi's petition for panel rehearing and rehearing en banc, according to CDC Gaming's report of the order, which says the panel was unanimous and no judge asked for a full-court vote. The denial leaves in place the court's earlier holding that sports event contracts are not swaps and are not shielded from state gambling bans. Nevada's ban on those contracts therefore stays in effect, and the trade report says Kalshi is no longer protected from state enforcement there.

The next step belongs to Kalshi. Under the timetable CDC Gaming reports, the company has 90 days to file a petition for certiorari with the Supreme Court. Its counsel, Paul Clement, could seek to coordinate that petition with a Third Circuit case already before the high court. The same report says Clement might instead slow the process so a Commodity Futures Trading Commission rule could become final first. That is the outlet's reading of strategy, not a filing anyone has made.

The CFTC rule is the other moving part. On October 9 the agency issued a proposed rulemaking and a companion interim final rule on the jurisdiction of event contracts, including sports contracts on prediction markets. Public comments are due November 18. Nothing in that process is final, and a court is not bound by a regulator's view of a statute it is interpreting.

Analysis: the cost of this uncertainty falls first on Kalshi's Nevada users and on the company, which argues it faces civil and criminal exposure while operating under federal oversight. That is Kalshi's claim, and no court has accepted it. The state's position, backed by this ruling, is that federal derivatives law does not displace its gambling rules for these contracts. If the Supreme Court declines review, state law governs sports event contracts in the Ninth Circuit. If it takes the case, the timing of the CFTC rule will matter far more than the rehearing denial itself.