CFTC Rule Changes May Not Alter Kalshi’s Ninth Circuit Case

Nevada has opposed Kalshi’s request to delay a Ninth Circuit rehearing, arguing that pending Commodity Futures Trading Commission (CFTC) rulemaking will not change the court’s conclusion about the platform’s sports-event contracts. The dispute puts the significance of future federal rules against a ruling that Nevada says rests on the Commodity Exchange Act itself.

Why Nevada says a delay would not matter

In a September 25 letter, Kalshi argued that the court should grant its petition for rehearing en banc-a rehearing before all eligible judges-or hold the petition until the CFTC publishes a revised rule. The platform pointed to the agency’s stated intention to revise Section 40.11 of its regulations within the next two months.

Nevada’s response says that timetable does not justify putting the case on hold. The state’s lawyer, Nicole Saharsky of Mayer Brown, argued in the filing that the court already knew the CFTC intended to revise the provision when it issued its decision. In Nevada’s view, the agency’s statement indicates when a revision might happen, not that it will change the legal basis of the ruling.

That distinction goes to the heart of Kalshi’s challenge: whether federal authority over event contracts displaces state oversight of gambling. Nevada says the Ninth Circuit found the sports contracts were not “swaps” under the Commodity Exchange Act based on the statute’s text, context and purposes-not simply because of the current wording of Section 40.11. The Ninth Circuit ruling at the centre of Kalshi’s case therefore remains significant even as the federal rulemaking proceeds.

Kalshi’s procedural argument is that the CFTC’s anticipated change could be relevant to the court’s consideration of its rehearing petition. Nevada counters that changing the rule would not alter the court’s statutory analysis. The state characterises the request as an effort to prolong Kalshi’s operations while the dispute remains unresolved; that is Nevada’s allegation, not a finding by the court in this filing.

CFTC proposals meet a run of court rulings

The CFTC has submitted two proposed rules to the White House Office of Information and Regulatory Affairs, which reviews federal regulations before publication. One proposal would further define a swap to include event contracts, while the other would exclude casino-style gambling products. The agency’s proposals and the state-federal jurisdictional dispute are also central to the CFTC’s work on prediction-market rules.

The rulemaking has not yet established that the Ninth Circuit will revisit its reasoning. In August, a three-judge Ninth Circuit panel ruled that Kalshi could not block Nevada gaming regulators from overseeing its platform, concluding that the Commodity Exchange Act likely does not pre-empt state gaming law. The court’s analysis is the basis for Nevada’s position that a change to one regulation would not decide the rehearing question.

Other recent cases show the dispute is not limited to Nevada. In a separate case, Blue Lake Rancheria v. Kalshi, the Ninth Circuit ruled that the Commodity Exchange Act does not authorise sports betting on tribal land. The Sixth Circuit has also ruled that Ohio and Tennessee can enforce their sports-gambling laws against Kalshi. Earlier state-level proceedings form part of the wider appellate backdrop, including Kalshi’s disputes over state efforts to restrict its markets.

Rehearing and Illinois terms remain outstanding

The Ninth Circuit has yet to decide how to handle Kalshi’s rehearing petition or its request to delay consideration. The CFTC’s proposals could eventually produce revised event-contract rules, but the filing does not establish that those rules would alter the court’s reading of the statute. For operators, the unresolved question is whether federal treatment of a contract can shield a product from state gaming requirements where courts have characterised sports-event markets as gambling.

A separate Illinois case adds another live front. A federal judge granted in part preliminary-injunction requests involving Kalshi, Coinbase and the CFTC, finding that state gaming-licensing regulations conflict with federal law governing sports-event contracts. The precise terms of the injunction still need to be drafted, and the judge ordered the parties to submit a proposed injunction by October 29.

The Illinois Gaming Board considers sports-event contracts illegal, untaxed gambling. The state legislature has imposed a transaction tax of 1.75% to 3.5% on sports-event contracts offered by prediction markets, while challenges to the state’s wagering fees remain unresolved in the case. Those issues, like the Ninth Circuit petition, leave the practical boundaries between federal oversight and state gambling regulation unsettled.