Ninth Circuit backs Nevada
A three-judge panel of the Ninth Circuit Court of Appeals ruled on Friday that federal commodities trading law does not override a state's right to regulate gambling. The decision undercuts Kalshi, which had tried to stop Nevada gaming regulators from moving against its sports markets.
Judge Ryan D. Nelson called the company's argument overly broad. Kalshi leaned on the 2010 Dodd-Frank reforms, but Nelson pointed out that commodities exchange law for years barred the listing of contracts tied to 'terrorism, murder, war, gambling, or activity unlawful under state or federal law'. He also said Kalshi has 'a gambling problem': it markets sports contracts as legal gambling while telling the court they are not bets. 'That argument does not hold up', the judge wrote.
Circuit split
The ruling puts the Ninth Circuit against the Third Circuit's April decision in Kalshi's case against New Jersey's regulator. The split makes Supreme Court review close to certain. The Ninth Circuit covers Nevada, Arizona, California and eight more jurisdictions, so other states can follow Nevada's lead.
Arizona Attorney General Kris Mayes said: 'Financial reform was never meant to strip states of their traditional authority to oversee gambling. Kalshi's position would effectively federalize sports betting regulation and undo decades of state and tribal oversight.'
Nevada's regulator is seeking $120,000 a day in fines from Kalshi for refusing to geoblock in the state. Kalshi is valued at $22 billion after raising $1 billion in venture capital in the spring. Donald Trump Jr. joined as an adviser with a $300,000 stake, now worth millions.
