Prediction-market platform Kalshi added two Milbank attorneys to its Ninth Circuit case on 8 September, days before the deadline to petition for en banc rehearing. The move came eleven days after the court ruled that Nevada may regulate Kalshi's sports contracts under state gambling law.
On 28 August the Ninth Circuit rejected Kalshi's argument that the federal Commodity Exchange Act pre-empts state authority. The court held that Kalshi's sports contracts are not 'swaps' under the CEA — a critical finding, because Kalshi's pre-emption theory depends on CFTC exclusive jurisdiction. The problem: the Third Circuit already said the opposite in a New Jersey case, ruling that Kalshi's contracts are swaps on a regulated market and that federal law pre-empts state attempts to treat them as gambling. Two federal appeals courts have given incompatible answers to the same question, a classic circuit split.
Kalshi's position is now complex. New Jersey filed a petition to the Supreme Court on 2 September (No. 26-299, Flaherty v. KalshiEX), and Kalshi's response is due 8 October. That means the company can challenge its Ninth Circuit loss through en banc rehearing while defending its Third Circuit win in a case the state itself brought to the Supreme Court. If the Ninth Circuit grants the motion, the adverse precedent may disappear or shift. If it denies with a reasoned dissent, Kalshi gains ammunition for Washington. If it stays silent, the split remains but the company defends a favourable ruling rather than appealing an unfavourable one.
Gambling-law attorney Daniel Wallach noted the new lawyers' appearance on 9 September and suggested Kalshi may file for rehearing rather than petitioning the Supreme Court directly. The deadline expires Friday.
