Ninth Circuit Weighs Kalshi Event Contracts, Supreme Court Review Looms
The Ninth Circuit heard Kalshi’s appeal on April 16, 2026, deepening a federal-state regulatory divide.
Why it matters: Event contract platforms like Kalshi sit at the intersection of federal commodities law and state gambling regulation. The Ninth Circuit’s decision could reshape compliance responsibilities, operational risk, and regulatory clarity for legal tech and fintech firms.
- April 16, 2026: Ninth Circuit heard arguments in Kalshi’s case about federal vs. state oversight.
- Third Circuit found certain event contracts are federally regulated 'swaps,' blocking state bans.
- Nevada court labeled these contracts unlicensed gambling, issuing a temporary order against Kalshi.
- Arizona federal judge ruled CFTC’s federal authority bars state prosecutions against Kalshi.
The legal status of Kalshi’s event contract markets—platforms where users predict outcomes ranging from elections to sporting events—came under intense scrutiny in the Ninth Circuit on April 16, 2026. Core issue: Do these contracts fall under federal commodity law or state gambling regulation?
- In April, the Third Circuit ruled that Kalshi’s contracts meet the Commodity Exchange Act’s definition of "swaps." This gives the Commodity Futures Trading Commission (CFTC) exclusive authority and preempts state gambling rules.
- Just weeks before, a Nevada state judge issued an emergency order against Kalshi, classifying its products as illegal gambling under state law and blocking operations.
- By contrast, an Arizona federal judge sided with Kalshi, halting state enforcement and citing the CFTC’s role. U.S. District Judge Michael Liburdi explained that the Act "grants the CFTC 'exclusive jurisdiction' over the regulation of 'swaps' traded or executed on a Designated Contract Market" (a federally recognized trading venue).
States argue their gambling laws still apply, with New York Attorney General Letitia James stating, "Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution."
This split puts compliance and legal operations professionals on alert. Uncertainty over who regulates these platforms—federal agencies like the CFTC or state regulators—affects product launches, enforcement risk, client guidance, and transactional due diligence for legal tech and fintech innovators.
The Ninth Circuit’s upcoming decision may deepen the divide, pushing the issue toward the Supreme Court for final resolution.
By the numbers:
- 2-1 — The Third Circuit vote holding that event contracts are federally regulated swaps.
- 3 — Number of different jurisdictions with active litigation or enforcement against Kalshi in 2026.
- April 16, 2026 — Date of the Ninth Circuit argument.
Yes, but: A final decision may not resolve all uncertainty, as federal and state regulators could continue to issue conflicting guidance until the Supreme Court rules.
What's next: A ruling from the Ninth Circuit is expected by late summer 2026, with a Supreme Court petition likely to follow.