Kalshi’s Ninth Circuit Loss Is Already Spreading to Courts Across the Country

The Ninth Circuit’s August 28 loss for Kalshi is no longer confined to Nevada. 

Within days of the decision in KalshiEX v. Assad, state officials began submitting the opinion in other cases involving the same central dispute: whether sports event contracts offered on a federally regulated exchange remain subject to state gambling laws.

As of today, five states involved in active Kalshi litigation have formally turned the Ninth Circuit opinion into supplemental legal authority.

Before this ruling, states opposing Kalshi largely had district court decisions, their own statutory arguments and a patchwork of conflicting rulings to work with. They now have a published federal appellate opinion rejecting the core interpretation of commodities law that underpins Kalshi’s effort to keep sports contracts outside state gambling regulation.

The filings, however, do not guarantee these states will be victorious in their lawsuits against Kalshi. Each court still has to decide how much weight to give Assad, and the ruling is binding only within the Ninth Circuit. What has changed is the legal toolkit available to state regulators.

Rhode Island filed the Ninth Circuit decision as supplemental authority on August 28 in consolidated federal litigation involving Kalshi and Polymarket. State officials told the court that Assad addressed the same questions of whether sports event contracts qualify as swaps and whether state gambling laws are preempted by the Commodity Exchange Act.

Illinois acted the same day in KalshiEX v. Raoul. State defendants asked the federal court for permission to cite the new Ninth Circuit decision while Kalshi’s request for a preliminary injunction remained pending.

Those early filings show why Assad immediately became useful outside Nevada. The underlying legal disputes are not merely similar in theme. In many of these cases, Kalshi is advancing substantially the same federal preemption argument against different state regulators.

Once an appellate court issued a detailed rejection of that argument, state attorneys defending parallel cases had an obvious reason to put the opinion before their own judges.

Ohio joined the group on August 31, filing a supplemental-authority letter with the Sixth Circuit in Kalshi’s appeal from an Ohio case. The Sixth Circuit is already confronting conflicting lower-court outcomes involving Ohio and Tennessee, giving the Ninth Circuit’s reasoning another appellate venue in which it could influence the developing law.

Iowa submitted Assad the same day in KalshiEX v. Bird, where Kalshi is attempting to prevent state officials from applying Iowa gambling law to its sports event contracts. The preliminary-injunction dispute there had already been argued before the Ninth Circuit handed down its opinion.

Utah then cited the ruling in Kalshi’s Tenth Circuit litigation. That filing pushes Assad into another federal appellate court and gives the Tenth Circuit a recent appellate analysis to consider as it weighs Kalshi’s federal preemption theory.

The geography is increasingly important. What began as a Ninth Circuit ruling involving Nevada is now appearing in federal litigation in the First, Sixth, Eighth, Seventh and Tenth Circuit territories through cases involving Rhode Island, Ohio, Iowa, Illinois and Utah.

Outside the Ninth Circuit, Assad is persuasive rather than binding authority. Courts elsewhere can reject its reasoning, and another federal appellate court has already taken a more Kalshi-friendly view of whether sports event contracts qualify as swaps protected by federal law.

That still gives state regulators a much stronger argument than they had before August 28. They can now point to a three-judge appellate panel that examined Kalshi’s interpretation of the Commodity Exchange Act, concluded its sports contracts were likely not swaps and rejected its express, conflict and field preemption arguments.

Kalshi is also relying on favorable language in Assad, particularly the court’s recognition that federal law preempts state regulation of genuine swaps traded on CFTC-regulated markets. The fight now turns largely on classification: whether Kalshi’s sports contracts qualify for that federal protection in the first place.

The next phase will be watching how judges respond now that Assad is actually in front of them. Preliminary-injunction disputes remain active in Illinois, Iowa and Rhode Island, while appellate proceedings involving Ohio and Utah give two more federal circuits opportunities to address the Ninth Circuit’s reasoning.

Other states involved in Kalshi litigation can also cite the ruling if it supports their position, so the current five may not remain five for long.

Kalshi will continue emphasizing the portions of Assad that recognize exclusive federal authority over genuine swaps while arguing that the Ninth Circuit classified its sports contracts incorrectly. State regulators will push the opposite reading.

The result is a legal fight increasingly being argued from the same two competing appellate frameworks. The Ninth Circuit’s contribution is now spreading far beyond Nevada, one filing at a time.