The Ninth Circuit Court of Appeals on Friday unanimously ruled against Kalshi. All three judges concluded that the operator's sports markets should not be exempt from state sports betting laws. The ruling contradicts the Third Circuit's position and clears the way for a Supreme Court challenge. New Jersey filed its petition to SCOTUS on Wednesday.
Law professor Melinda Roth of New England Law argues the verdict does not weaken Kalshi's position. 'Everyone knew Nevada would rule against Kalshi, the question was just how they would phrase it. This doesn't change Kalshi's odds of winning at the Supreme Court,' she told CasinoBeats. Roth pointed to gaps in the ruling the platform can exploit: Judge Kenneth Kiyul Lee left ambiguity in the interpretation of the Special Rule — the provision under which the CFTC may ban gambling-related contracts. The court held that Kalshi's sports markets are not 'swaps' under the Commodity Exchange Act but display 'characteristics of sports betting'. Roth notes the criteria remain vague. The same logic applies to many other event contracts.
Attorney Stephen Piepgrass called the outcome expected and cited the statistics: since 2007, the Supreme Court has overturned 79.5% of Ninth Circuit rulings it agreed to review. Since 2020, 15 out of 16. 'If you're an operator weighing the odds, an appeal from the Ninth Circuit to the current SCOTUS is one of the best scenarios,' he said. The CFTC has proposed new rules that could explicitly legalise sports contracts. But the major questions doctrine may limit the regulator's authority — sweeping changes require direct congressional authorisation, and former senator Chris Dodd, one of the authors of the Dodd-Frank Act, has said Congress never intended to allow sports contracts.
