Ninth Circuit denies Kalshi rehearing petition in Nevada prediction-markets case
Regulation2 min read
The US Court of Appeals for the Ninth Circuit denied Kalshi’s requests for panel rehearing and rehearing en banc in its Nevada case, leaving the ruling dissolving the preliminary injunction against Nevada gaming regulators in place. Kalshi has 90 days to petition the US Supreme Court; the sports-event contract ban remains in effect in Nevada, and the company says the ruling exposes it to civil and criminal liability.
On Wednesday, the Ninth Circuit turned down Kalshi's request to have the case reconsidered by the panel or by the full court. No judge asked for a full-court vote. The panel was unanimous in declining to rehear the matter, per the decision.
Kalshi has 90 days to ask the U.S. Supreme Court to take up the matter through a petition for writ of certiorari. Paul Clement, who represents Kalshi, may try to align the case with the Third Circuit litigation already filed with the high court. Clement may also try to postpone Supreme Court review until the CFTC rulemaking is final.
The CFTC put out a Notice of Proposed Rulemaking and a companion Interim Final Rule on October 9, dealing with the jurisdiction of event contracts such as sports-event contracts on prediction markets. The deadline for public comments on the proposed rulemaking is November 18.
Kalshi requested that the Ninth Circuit revisit its recent ruling, which affirmed the lifting of a preliminary injunction that had been issued against Nevada gaming regulators. Kalshi no longer has protection from state enforcement, and Nevada's ban on sports event contracts stays in force. Under the unanimous Ninth Circuit ruling, sports event contracts fall outside the definition of a swap, so state gambling laws can prohibit them.
Kalshi's 78-page petition argued that the Ninth Circuit ruling leaves the company open to civil and criminal liability despite CFTC regulation. Kalshi further argued that rehearing was needed because the ruling produced a circuit split over federal preemption. The brief reads: "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 report places the ruling amid a widening split among circuit courts over whether federal derivatives rules under the Dodd-Frank Act and the Commodity Exchange Act (CEA) override state and tribal gaming law for prediction market contracts, sports ones in particular.