Ninth Circuit holds Kalshi sports event contracts are likely not swaps and remands election-contract claims

What happened

The U.S. Court of Appeals for the Ninth Circuit issued a published opinion in KalshiEX, LLC v. Assad on 28 August 2026. Judge Ryan D. Nelson wrote for the court, joined by Judge Bridget S. Bade. Judge Kenneth K. Lee filed a concurrence. The panel affirmed in part the district court’s order dissolving a preliminary injunction that had barred Nevada from enforcing its gaming laws against KalshiEX’s sports event contracts, and remanded for the district court to consider Nevada’s challenges to Kalshi’s election contracts.

KalshiEX is a designated contract market registered with the Commodity Futures Trading Commission. In January 2025 it self-certified sports event contracts and began offering them. The opinion states that traders can buy and sell contracts on sporting outcomes, including who will win the Super Bowl, proposition bets, and parlays, and that Kalshi advertises itself as “the first app for legal sports betting in all 50 states.” Over 90% of Kalshi’s trades in 2025, representing 95% of its revenue, were sports-related. In March 2025 the Nevada Gaming Control Board sent a cease-and-desist letter concluding that the sports event contracts were “a system or method of wagering on sporting events and other events” and that Kalshi was “operating as an unlicensed sports pool” in violation of Nev. Rev. Stat. §§ 463.160(1) and 463.245(2). Kalshi sued and obtained a preliminary injunction. After a later ruling denying similar relief to another designated contract market, Crypto.com, the district court dissolved Kalshi’s injunction.

The panel held that Kalshi had not shown a likelihood that the Commodity Exchange Act preempts Nevada’s gaming regulations as applied to the sports event contracts, and that the district court did not abuse its discretion in dissolving the injunction as to those contracts. Because Kalshi invoked the Act as a sword against the State, the court said it, not the Commission, must “say what the law is.” Section 2(a)(1)(A) gives the Commission exclusive jurisdiction over “transactions involving swaps” that are “traded or executed on” a designated contract market. There was no dispute that Kalshi’s sports event contracts were traded on such a market. The dispositive question was whether they are “swaps” under 7 U.S.C. § 1a(47)(A)(ii). The court concluded that these sports event contracts are likely not swaps under the CEA. Payment depends on the outcome of a game or of events within a game, not on “the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence” as the statute uses those words. Reading the definition to cover sports bets, the opinion said, would assume Congress was “hiding an elephant in a mousehole” and would raise a major-questions problem: the Dodd-Frank Act did not confer on the Commission the power to regulate national sports gambling. An amicus brief for New Jersey, Ohio, 37 other States, and the District of Columbia, quoted in the opinion, stated that “Americans wagered almost $150 billion on sports in 2024.”

Independently, the panel held that listing the contracts was unlawful under 17 C.F.R. § 40.11(a), which provides that a registered entity “shall not list for trading” a contract based on an excluded commodity that “involves, relates to, or references … gaming.” The Commission had not invoked the 90-day review in § 40.11(c) or issued an order approving the contracts, so that prohibition remained in effect. A notice of proposed rulemaking cited by Kalshi had, the court said, “no legal effect.” Conflict preemption failed: it was not impossible to comply with both Nevada law and the Act, and Nevada law was not shown to pose an obstacle to the Act’s purposes. Field preemption failed because, although the Act occupies the field of regulating swaps traded on a designated contract market, it has not occupied the field of state gaming regulation.

Judge Lee concurred. He agreed that the ordinary meaning of “event” in the swap definition does not include the outcome of a sporting event. One statutory provision gave him pause: the Special Rule says the Commission “may determine” that certain contracts involving gaming are contrary to the public interest, which “appears to give the CFTC discretion whether to ban altogether gaming contracts.” He found it unnecessary to resolve that question because § 40.11, as written, bars gaming contracts and “controls the outcome of this appeal.” The panel noted that the Third Circuit had reached the opposite result in KalshiEX, LLC v. Flaherty, 172 F.4th 220 (3d Cir. 2026), treating sports-related event contracts as swaps, and that an appeal remains pending in the Fourth Circuit in KalshiEX LLC v. Martin, No. 25-1892. The Commodity Futures Trading Commission appeared as amicus curiae.

Key facts

The decision is KalshiEX, LLC v. Assad, No. 25-7516, filed 28 August 2026, on appeal from D.C. No. 2:25-cv-00575-APG-BNW in the District of Nevada.
Judge Ryan D. Nelson wrote the opinion of the court, joined by Judge Bridget S. Bade. Judge Kenneth K. Lee filed a concurrence. The panel heard argument on 16 April 2026 in San Francisco.
The court held that Kalshi did not show a likelihood that the Commodity Exchange Act preempts Nevada gaming regulations as applied to its sports event contracts, and that the district court did not abuse its discretion in dissolving the injunction as to those contracts.
The opinion concludes that the sports event contracts are likely not “swaps” under 7 U.S.C. § 1a(47)(A)(ii), and that 17 C.F.R. § 40.11(a) currently bars designated contract markets from listing contracts that involve, relate to, or reference gaming.
The court remanded for the district court to consider Nevada’s challenges to Kalshi’s election contracts in the first instance.
The opinion notes a conflict with KalshiEX, LLC v. Flaherty, 172 F.4th 220 (3d Cir. 2026), and a pending Fourth Circuit appeal in KalshiEX LLC v. Martin, No. 25-1892.
The opinion states that over 90% of Kalshi’s trades in 2025, representing 95% of its revenue, were sports-related. The Commodity Futures Trading Commission appeared as amicus curiae.

Sources

Opinion of the Court, KalshiEX, LLC v. AssadU.S. Court of Appeals for the Ninth Circuit · 28 August 2026

Perspectives

Opinion of the CourtKalshi’s sports event contracts are sports bets, and are likely not swaps under the CEA. Section 2(a)(1)(A) gives the Commission exclusive jurisdiction over swaps traded on a designated contract market, but these contracts fail the swap definition in § 1a(47)(A)(ii) because they turn on game outcomes rather than an event associated with a potential financial, economic, or commercial consequence. Congress did not hide national sports-gambling regulation in Dodd-Frank. Independently, 17 C.F.R. § 40.11(a) forbids listing gaming contracts. Conflict and field preemption fail. States retain their police power over gambling.
ConcurrenceThe ordinary meaning of “event” in the swap definition does not include the outcome of a sporting event, and the major-questions doctrine supplies context for reading those words. The Special Rule’s statement that the Commission “may determine” that gaming contracts are contrary to the public interest appears to give the Commission discretion whether to ban such contracts altogether, so the statute may not categorically bar all of them. That question need not be resolved in this appeal because § 40.11, as written, bars gaming contracts and controls the outcome.
KalshiEX, LLCSports event contracts listed on a Commission-designated contract market are swaps under § 1a(47)(A)(ii). The Act’s exclusive-jurisdiction clause therefore preempts Nevada from enforcing its gaming laws against on-exchange trades. The Special Rule is textual proof that Congress assigned to the Commission, not to the fifty States, any public-interest determination about event contracts involving gaming.
NevadaThe Nevada Gaming Control Board’s March 2025 cease-and-desist letter concluded that Kalshi’s sports event contracts were a system or method of wagering on sporting events and other events, and that Kalshi was operating as an unlicensed sports pool in violation of Nev. Rev. Stat. §§ 463.160(1) and 463.245(2). Nevada is enforcing its own gaming statutes about what qualifies as a bet or wager, not challenging a Commission determination. Those statutes regulate gaming activity, a field the Commodity Exchange Act has not occupied.
Commodity Futures Trading CommissionThe court may decide what constitutes a swap. As the panel described the Commission’s litigation position, joined with Kalshi, the Special Rule and § 40.11 do not categorically bar gaming contracts until the Commission reviews and disallows them, and sports event contracts do not involve gaming.