What Kalshi’s Big Court Loss Means for Prediction Markets

In June, Kalshi CEO Tarek Mansour told Front Office Sports he wasn’t worried about the prospect of a Supreme Court ruling that could upend the prediction-market industry’s ability to offer sports-event contracts nationwide.

“We feel very confident about the legal analysis,” Mansour said. 

But on Friday, a three-judge panel for the Ninth Circuit—a federal appeals court—brought a Supreme Court fight one step closer when it unanimously ruled that Nevada can enforce its gambling laws against Kalshi. Separately, the Ninth Circuit said the facts in suits involving Robinhood and Crypto.com “mirror” those in the Kalshi case.

“KalshiEX, LLC advertises itself as ‘the first app for legal sports betting in all 50 states,’” the opinion said. “Because we disagree with Kalshi’s overly broad reading of the [Commodity Exchange Act], and because CFTC regulations currently prohibit offering contracts related to gaming on prediction markets, we affirm the district court’s order dissolving the injunction as to sports event contracts.”

Kalshi launched sports-event contracts in January of last year. In 2025, the company’s trading volume was just under 87% sports, according to data from one of its primary venture capital backers, Paradigm. Mansour told FOS in June that the percentage of total trading volume from sports was declining, and while he’s right, sports still makes up a majority of trading activity on the platform—72% thus far in 2026.

Here, FOS breaks down three takeaways from the ruling, and what this all means for prediction markets.

A SCOTUS Showdown Is Closer Than Ever 

Last April, when only a handful of states had taken action against Kalshi, U.S. gaming attorney Daniel Wallach told FOS a “heavyweight court battle” was in the cards. Today, roughly 20 states are engaged in lawsuits with platforms, and attorneys general from 44 states recently ripped the CFTC’s proposed rules to govern sports markets. Experts have been saying for months that the Supreme Court was an inevitable destination for the fight.

Friday’s ruling brings that Supreme Court battle closer because of a “circuit split”—two appeals courts have ruled differently on the same issue. In April, the Third Circuit ruled New Jersey’s gaming regulator could not stop Kalshi from offering sports-event contracts in the state.

Kalshi already signaled it will seek “further review,” although asking the Supreme Court to weigh in isn’t its only option; it can also request a rehearing en banc at the Ninth Circuit, which means an 11-judge panel could reconsider the case. A CFTC spokesperson told The Block the Ninth Circuit ruling has created a “circuit split that calls out for resolution by the Supreme Court.” 

New Jersey can also seek Supreme Court review; it has until Sept. 3 to file a petition for review.

Even though a Supreme Court showdown has become “substantially more plausible,” it’s not yet guaranteed, according to former CFTC lawyer Carl Kennedy, who now works at law firm Katten Muchin.

“It’s important to note that both decisions arise from preliminary-injunction proceedings, not final merit judgments,” Kennedy wrote in an analysis published Friday. “Thus, the Supreme Court may resolve the split now or wait for a more procedurally developed case.”

Nevada Is a No-Go for Sports-Event Contracts

The Nevada Gaming Control Board, which in separate cases had previously won preliminary injunctions blocking Kalshi and rival Polymarket from offering sports-event contracts in the state, took an immediate victory lap.

“This completely vindicates what we have been saying all along,” said chairman Mike Dreitzer. “This is sports betting and needs to be properly regulated by the state.”

“We will continue to vigorously enforce Nevada law to safeguard gaming in our state,” he added. 

The ruling against Kalshi, and the accompanying filings tied to the Robinhood and Crypto.com cases, means Nevada can enforce its gambling laws against those three platforms.

Friday’s news does not specifically implicate Polymarket, although the ruling could bolster Nevada’s position in its separate case against the platform. Other platforms, like DraftKings Predictions, FanDuel Predicts, Novig, and ProphetX, currently do not offer sports-event contracts in the state.

This Ruling Will Reverberate in Other Court Cases

Although the Ninth Circuit’s decision doesn’t automatically change the legal landscape in other states, it gives state regulators a powerful new precedent they can cite as supplemental authority in their ongoing cases. 

Wallach noted that Illinois and Rhode Island have already done so, and he expects other states to quickly follow suit. Wallach also pointed out that the ruling provides ammo for the argument that sports-event contracts are unlawful in certain parts of the U.S. under the Indian Gaming Regulatory Act, which permits federally recognized Native tribes to operate gaming facilities on tribal lands under certain conditions.  “IGRA lawsuits incoming,” Wallach posted on social media.

But the ruling is also a hit to the CFTC, whose chairman, Michael Selig, told FOS in April that his agency has both “broad authority” to regulate prediction markets and “exclusive jurisdiction” over the industry. In recent months, the CFTC has sued nine states that sought to block sports-event contracts, including Kentucky, Minnesota, and Arizona. 

Now, those states can point to a federal appeals court that rejected Kalshi’s argument about federal law preempting state gambling regulations.