Ninth Circuit Ruling Creates Legal Split on Kalshi Contracts
- The Ninth Circuit ruled unanimously on August 28 that Kalshi’s sports event contracts are not swaps, classifying them as gambling instead.
- This decision contradicts the Third Circuit’s April ruling, which found the contracts likely were swaps and preempted from state regulation.
- New Jersey has until September 3 to petition the Supreme Court regarding this legal split, potentially affecting state control over a multi-billion-dollar sports-wagering industry.
- Kalshi, along with Crypto.com and Robinhood, lost bids for injunctive relief to continue offering these contracts in Nevada.
The Ninth Circuit’s decision emphasizes the classification of Kalshi’s contracts as gambling rather than financial swaps, challenging federal oversight by the Commodity Futures Trading Commission (CFTC). This legal divergence between circuits could prompt Supreme Court intervention to resolve regulatory authority over such contracts.
The ruling impacts Kalshi’s operations across several states and raises questions about federal versus state jurisdiction in regulating betting markets. New Jersey’s upcoming petition may set a precedent for how similar cases are handled nationwide. (Source)
