Prediction market platform Kalshi has petitioned for an En Banc rehearing before the 9th Circuit Court of Appeals, escalating its legal dispute with Nevada over sports-related contracts. The rehearing would involve 11 judges rather than the three-judge panel that initially decided the case.
The 9th Circuit panel previously ruled that Nevada gaming regulators could regulate Kalshi's sports contracts as gambling, concluding they were sports bets rather than swaps exempt under the Commodity Exchange Act (CEA). Kalshi argues the decision creates contradictory reasoning, stating that the court recognized the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over instruments traded on derivative exchanges, yet permitted states to regulate sports contracts the CFTC approved for trading on those exchanges.
In its petition, Kalshi contended that rehearing is necessary because the panel's decision creates a circuit split on federal preemption and relies on internally inconsistent reasoning that conflicts with the plain text of the CEA. The platform stated that the ruling leaves it exposed to civil and criminal liability despite operating under federal law and CFTC approval.
Robinhood, another platform involved in the case, has separately filed a certiorari petition with the U.S. Supreme Court seeking review of the 9th Circuit decision. This follows New Jersey's earlier certiorari petition questioning whether states have jurisdiction over sports prediction markets.
A circuit split has emerged on the issue. The 3rd U.S. Circuit Court of Appeals previously ruled in favor of Kalshi, determining that the CFTC has exclusive jurisdiction over sports prediction markets because they constitute swaps. The 9th Circuit's opposing ruling created the disagreement between the circuits.
