54 min ago3 min readCEO Tarek Mansour's Kalshi faced a significant legal setback in a federal court ruling. (Jesse Hamilton/CoinDesk)SummaryA federal appeals court in Nevada issued a major setback to Kalshi's legal campaign to reject the enforcement of state gaming regulators, rejecting its argument that the company's federal regulator should have the only say.This is the second major federal court ruling, though, and they've gone in opposite directions, leaving a legal rift in the matter.The legal pressure is ratcheting up on Kalshi and the broader U.S. prediction market industry after a significant federal court rejection of the company's argument that the state of Nevada had no right to regulate its betting activity.The panel of judges from the U.S. Court of Appeals for the Ninth Circuit issued a unanimous decision on Friday, disagreeing with Kalshi's argument that Nevada regulators don't have a role in overseeing its business, which is conducted on a platform regulated by the Commodity Futures Trading Commission and the law that underpins it, the Commodity Exchange Act."The panel concluded that the CEA likely does not preempt Nevada’s gaming regulations as applied to Kalshi’s sports event contracts," according to the ruling, which disputed that the activity qualifies as "swaps" trades that belong under the CFTC's jurisdiction. Under U.S. commodities law, "the sports event contracts were not 'swaps' because they were sports bets."But instead of slamming the door on the increasingly popular form of retail trading, the ruling further muddies the waters; in April, another federal court had made an opposite determination when telling New Jersey it had no business regulating Kalshi. With opposing court actions, it's even more likely the U.S. Supreme Court will have to take up the U.S. industry's core question."The Ninth Circuit has now teed up a circuit split that calls out for resolution by the Supreme Court," said CFTC spokesman Zach Fulton in an email, accusing the judges of misreading the law. "A derivative contract structured as a swap is a swap regardless of the underlying subject matter; the only exceptions in statute are onions and movie box office receipts. The Ninth Circuit erred today when it invented a new and atextual exception to the CEA."State authorities in Nevada had opposed the prediction markets businesses since 2025 and reiterated on Friday that Kalshi has been engaged in illegal wagering under Nevada's gambling laws, though Kalshi had already pulled out of Nevada and other jurisdictions in response to local orders."This completely vindicates what we have been saying all along," Nevada Gaming Control Board Chairman Mike Dreitzer said in a statement responding to the ruling, which also referenced the betting at Robinhood and Crypto.com. "This is sports betting and needs to be properly regulated by the state."Kalshi highlighted what it considered an important point in the ruling."The Ninth Circuit agreed with the Third Circuit on a fundamental point: Federal law prevents states from regulating trading on a federally licensed exchange, like Kalshi," said Dani Lever, a Kalshi spokesperson, in a statement."Despite the Ninth Circuit’s opinion, we still believe the CFTC regulations as written do not prohibit sports contracts, and in any event, the CFTC is working to clarify those regulations," Lever said. "We will be seeking further review."Kalshi and other prediction markets businesses have been fighting with state regulators for months, with a lengthy list of active lawsuits progressing through local and federal courts. Earlier this week, Connecticut filed the latest lawsuit. But Kalshi's federal regulator has also been in the fight as the CFTC is pursuing a number of its own lawsuits arguing that it should have sole jurisdiction over Kalshi and similar companies.The prediction markets industry's rivals in sports wagering celebrated the federal court's decision on Friday.“This ruling is a significant win for consumer protections and taxpayers," the American Gaming Association said in a statement. "It is a big loss for Kalshi and other backdoor sports gambling operations who defy state laws.”Read More: Kalshi gets temporary Nevada ban in dispute over sports betting12345678910Anvil: The Missing Collateral LayerAnvil: The Missing Collateral LayerAnvil is a shared on-chain collateral layer built on a programmable letter of credit: reserve assets as a guarantee -no loan, no interest, keep custody & yield.Jul 29, 2026Anvil is a shared on-chain collateral layer built on a programmable letter of credit: reserve assets as a guarantee -no loan, no interest, keep custody & yield.Why it matters:Anvil is a shared on-chain collateral layer built on a programmable letter of credit: reserve assets as a guarantee -no loan, no interest, keep custody & yield.View Full Report