Daily News 19

Tag: Nevada Gaming Control Board

  • Kalshi Seeks En Banc Rehearing in Nevada Sports Prediction Markets Case

    Kalshi Seeks En Banc Rehearing in Nevada Sports Prediction Markets Case

    Prediction market platform Kalshi has escalated its legal challenge against the state of Nevada, filing a petition for an en banc rehearing before the Ninth Circuit Court of Appeals. The move comes after a three-judge panel ruled in favor of Nevada, upholding the state regulator’s authority to classify Kalshi’s sports-related event contracts as gambling.

    Background: Kalshi vs. Nevada Regulatory Action

    The dispute centers on Kalshi’s offerings of event contracts tied to sports outcomes. The Nevada Gaming Control Board (NGCB) previously issued a cease-and-desist order asserting that these contracts constitute unlicensed gambling under state law. Kalshi, a federally regulated exchange overseen by the Commodity Futures Trading Commission (CFTC), argues that its contracts fall under federal derivatives jurisdiction and are therefore preempted from state gambling regulation.

    Ninth Circuit Panel Decision

    In a recent decision, a Ninth Circuit panel sided with Nevada. The court held that the state retains the authority to regulate the sports contracts as gambling, rejecting Kalshi’s argument that the Commodity Exchange Act (CEA) preempts state law in this instance. The panel’s ruling effectively allows the NGCB’s enforcement action to proceed, creating a significant regulatory hurdle for the platform’s operations in the state.

    Petition for En Banc Rehearing

    Kalshi’s petition for a full court rehearing—known as an en banc review—asks the entire complement of active Ninth Circuit judges to reconsider the panel’s decision. Such petitions are granted sparingly, typically reserved for cases involving exceptional importance or conflicts with precedent. Kalshi contends that the panel’s ruling creates a circuit split regarding the scope of CEA preemption and threatens the regulatory framework for federally designated contract markets.

    Implications for Prediction Markets and Federal Preemption

    The outcome of this case carries broad implications for the prediction market industry and the balance of power between federal derivatives regulation and state gambling laws. A final ruling affirming state authority could encourage other states to pursue similar enforcement actions against federally regulated exchanges offering event contracts on sports, elections, or other outcomes. Conversely, a reversal would reinforce the CFTC’s exclusive jurisdiction over designated contract markets.

    Next Steps

    The Ninth Circuit will now decide whether to grant the petition for en banc review. If denied, the panel’s decision stands, and Kalshi may consider petitioning the U.S. Supreme Court. If granted, the case will be re-argued before a larger bench of judges, extending the legal timeline but offering Kalshi a critical opportunity to overturn the adverse precedent.

  • “This Seems Incorrect”: Ripple CTO Emeritus Slams Kalshi’s CFTC Argument

    “This Seems Incorrect”: Ripple CTO Emeritus Slams Kalshi’s CFTC Argument

    A new legal and regulatory debate is emerging over whether U.S. states or the Commodity Futures Trading Commission (CFTC) should oversee the rapidly expanding prediction markets industry. The dispute follows a federal appeals court ruling that Kalshi cannot prevent Nevada gaming regulators from supervising its platform.

    Kalshi and the CFTC maintain that sports event contracts qualify as “swaps” under the 2010 Dodd-Frank financial reforms, giving the agency authority to oversee them through its regulation of national swaps markets.

    David Schwartz, Ripple’s CTO emeritus, responded to an X post by sports betting and gaming attorney Daniel Wallach. Wallach argued that the CFTC’s rulemaking was effectively “dead on arrival” under the major-questions doctrine, which restricts federal agencies from asserting broad powers without clear authorization from Congress.

    Schwartz challenged that reasoning, saying the central issue is whether Congress delegated authority to regulate gambling conducted through exchange-traded contracts.

    “This seems to be incorrect to me. The question is only whether Congress delegated the power to regulate gambling through exchange-traded contracts. As Kalshi correctly points out, traditional sportsbook gambling is very different,” Schwartz wrote.

    This seems to be incorrect to me. The question is only whether Congress delegated the power to regulate gambling through exchange traded contracts. As Kalshi correctly points out, traditional sportsbook gambling is very different. https://t.co/EY6MKlq1Mx
    — David ‘JoelKatz’ Schwartz (@JoelKatz) August 28, 2026

    Elaborating on his position, Schwartz stated: “Of course Congress didn’t intend to replace state-regulated sportsbook gambling with exchange-traded products outside of state regulation. It meant to create a new, uniform federal framework for creating exchange-traded products outside of state regulation.”

    How the Kalshi prediction markets case began

    The legal battle started in March 2025, when the Nevada Gaming Control Board issued Kalshi a cease-and-desist letter. The regulator alleged that the company’s sports event contracts amounted to an unlicensed sports pool under Nevada gaming law.

    Kalshi countered that the CFTC’s authority over swaps preempted Nevada’s gambling regulations.

    On Friday, the 9th U.S. Circuit Court of Appeals in San Francisco upheld Nevada’s authority to regulate Kalshi’s prediction market activities. Circuit Judge Ryan Nelson said the contracts bear the characteristics of sports betting, “a quintessential form of gambling” that falls outside the CFTC’s regulatory jurisdiction.

    “The CFTC is not a national gambling regulator,” Nelson said, adding that “it is difficult, then, to conclude that Congress intended to ​upend its decades of careful regulation ​of gambling based on broad definitions of the words used in a Wall Street Reform Bill.”