Court Allows Nevada to Regulate Kalshi’s Sports Contracts as Sports Bets

^{The Ninth Circuit Court of Appeals in San Francisco}

A federal appeals court has sided with Nevada in its dispute with Kalshi over sports betting, allowing the state to apply its gambling laws to the platform’s sports contracts.

The dispute began in March 2025, when Nevada’s gaming regulator ordered Kalshi to stop accepting bets on sporting events and elections in the state. The regulator classified the platform’s sports contracts as sports bets, which can only be offered under a Nevada gaming license. Kalshi does not hold such a license, and state authorities warned the company that it could face civil or criminal penalties.

Kalshi responded by filing suit in federal court, arguing that its contracts are financial instruments regulated at the federal level by the Commodity Futures Trading Commission (CFTC). On that basis, the company maintains that individual states have no authority to require it to obtain a sports betting license.

A federal court in Nevada initially sided with Kalshi and temporarily blocked state enforcement, but later dissolved that preliminary injunction. Kalshi appealed, and the appeal was heard by the Ninth Circuit Court of Appeals in San Francisco. Although the court is based in California, its jurisdiction also covers Nevada.

The appeals court sided with the state only on the issue of sports contracts. It found that such contracts are, in substance, sports bets and may be subject to state gambling laws.

The question of election-outcome contracts was left unresolved, with the case sent back to the federal court in Nevada for further proceedings.

Notably, in April, the Third Circuit Court of Appeals, which covers Pennsylvania, New Jersey, Delaware and the U.S. Virgin Islands, reached the opposite conclusion, ruling that Kalshi’s sports contracts fall under federal regulation. Because two federal appeals courts have now reached conflicting rulings, the issue could eventually make its way to the U.S. Supreme Court. Legal battles over the regulation of prediction markets are currently playing out in 20 states.