The U.S. Court of Appeals for the Ninth Circuit on Wednesday denied Kalshi’s requests for a panel rehearing and a rehearing en banc in its legal dispute with Nevada gaming regulators, leaving in place a ruling that allows state enforcement against the prediction market operator.
The original three-judge panel unanimously rejected the petitions, and no judge requested a vote on whether the full court should reconsider the case.
“The full court has been advised of the petition for rehearing en banc, and no judge has requested a vote on whether to rehear the matter en banc,” the court’s order stated.
The decision leaves intact the Ninth Circuit’s August 28 ruling upholding the dissolution of a preliminary injunction that had protected Kalshi from Nevada enforcement. The company is therefore no longer covered by that preliminary protection, and its sports event contracts remain subject to the state’s gambling restrictions.
In its August decision, the appeals court found that Kalshi had not established that the Commodity Exchange Act (CEA) likely prevents Nevada from applying its gaming laws to the company’s sports event contracts. The court also ruled that the contracts did not qualify as swaps under the CEA.
Wednesday’s order does not provide a new analysis of the dispute or resolve the underlying lawsuit. The August ruling serves as precedent for federal courts within the Ninth Circuit, which covers California and eight other states, but the rehearing denial does not automatically impose a ban across all nine states or determine the outcome of individual enforcement cases.
Kalshi now generally has 90 days from the rehearing denial to file a petition for a writ of certiorari with the U.S. Supreme Court. The deadline is February 2, 2027, unless an extension is granted, although the company could file earlier.
Represented by attorney Paul Clement, Kalshi may seek to coordinate its case with the pending litigation involving New Jersey before the Third Circuit. New Jersey has already asked the Supreme Court to review the Third Circuit’s ruling in favor of Kalshi.
The conflicting appellate decisions have added to a growing dispute over whether federal derivatives regulation under the Dodd-Frank Act and the CEA preempts state and tribal gambling laws governing prediction market contracts, particularly those tied to sports events.
Kalshi argues that its contracts fall under the CFTC’s exclusive jurisdiction because it operates as a federally designated contract market. In its 78-page rehearing petition, the company said the Ninth Circuit had mischaracterized its sports event contracts as sports betting and reached a conclusion that conflicted with the CEA.
Kalshi also argued that the ruling exposed it to civil and criminal liability despite its federal regulatory status.
“As a result, Kalshi now stands exposed to civil and criminal liability, even though it is abiding by federal law and the mandate of its exclusive federal regulator,” the brief reads.
Nevada maintains that federal registration does not exempt Kalshi’s products from state gambling requirements.
The timing of any Supreme Court petition could be affected by a pending CFTC rulemaking on event contracts.
On October 9, the agency issued a Notice of Proposed Rulemaking and a companion Interim Final Rule addressing the jurisdiction of event contracts, including sports event contracts traded on prediction markets. Public comments on the proposed rulemaking are due by November 18.
Kalshi’s legal team may seek to delay Supreme Court review until the CFTC’s rulemaking becomes final.
The Ninth Circuit decision also follows a separate setback for Kalshi in the Second Circuit on Tuesday. That court declined to grant injunctions pending appeal in the company’s New York and Connecticut cases, as well as Coinbase’s Connecticut case.
Those appeals remain pending, and the Second Circuit’s order did not resolve the underlying question of federal preemption. Its decision concerned interim protection while the appeals proceed, whereas the Ninth Circuit declined to reconsider an earlier ruling against Kalshi.
A petition to the Supreme Court would not guarantee that the justices agree to hear the Nevada case or automatically suspend state enforcement.