Kalshi's En Banc Petition Freezes the Ninth Circuit Ruling for Football Season

Nevada's win against sports event contracts is stayed while the full court decides whether to rehear it, so Arizona, Montana and California cannot enforce, Nevada and Washington do so through state courts, and the Supreme Court's conference is on 28 September.

• Kalshi petitioned the Ninth Circuit last week for rehearing en banc of the 28 August panel decision that let Nevada enforce its gambling laws against sports event contracts, InGame reports
• The petition stays the decision, so the eight other states in the circuit, including California, cannot rely on it to enforce; Nevada and Washington are already enforcing under state court rulings
• Arizona has asked the Ninth Circuit to summarily vacate the district court injunction protecting Kalshi, calling the panel opinion "the law of this circuit", while Montana's late-August win against Kalshi cannot be acted on
• The Ninth Circuit granted 29 of 625 en banc petitions in 2024; the signal to watch is whether it asks Nevada for a response, without which rehearing is "ordinarily" not granted
• New Jersey and Robinhood have petitioned the Supreme Court, which can first consider the certiorari requests at its 28 September conference; the Tenth Circuit denied Kalshi an emergency injunction in Utah last week

The Ruling Everyone Cited Is Not in Force

The Ninth Circuit's unanimous decision that Kalshi's sports contracts are not swaps and that Nevada may regulate them was the clearest appellate loss the exchange has suffered, and for now it binds no one.

Kalshi asked the court last week to rehear the case en banc, before an 11-judge panel drawn from the circuit's 29, InGame reports. That request stays the panel's decision, a constitutional law professor told the outlet, which means the other states in the circuit, Alaska, Arizona, California, Hawaii, Idaho, Montana, Oregon and Washington, cannot use it to begin enforcement at the federal level. The timing is not incidental: the petition keeps Kalshi's contracts on offer through the NFL season in California, the largest state in the country, and through the weekend on which the exchange set two daily volume records.

Two states are enforcing regardless. Nevada and Washington obtained rulings in their own state courts that they could apply their gambling laws, and are doing so. Arizona, the first state to bring criminal charges against Kalshi, is in court with the exchange and its regulator on several fronts; the CFTC's suit against the state has stayed the other proceedings, and on 15 September the state asked the Ninth Circuit to summarily vacate the district court's preliminary injunction barring enforcement, arguing that the panel opinion in the Nevada case "is now the law of this circuit", according to a filing highlighted by the lawyer Daniel Wallach. In Montana, a district judge denied Kalshi a preliminary injunction in late August, but the state cannot enforce while the en banc request is pending. Attorneys general contacted by InGame said they were aware of the ruling and considering next steps; none shared enforcement plans.

The Odds on Rehearing, and the Road to Washington

There is no deadline for the Ninth Circuit to decide. Under its rules a response to a petition is not permitted unless the court requests one, and "ordinarily, rehearing will not be granted in the absence of such a request", so a call for Nevada's response would be the first sign of interest. The court granted 29 of the 625 en banc petitions filed in 2024, of which nine succeeded, per data InGame cites from the Complex Appellate Litigation Group. To qualify, Kalshi must show the panel decision conflicts with circuit law, creates or deepens an inter-circuit split, or leaves the Ninth Circuit in the minority on one. The split exists: the Third Circuit ruled for Kalshi against New Jersey earlier this year, and last week the Tenth Circuit refused Kalshi an emergency injunction after a Utah district court found the state could enforce, without deciding the long-term question.

The Supreme Court route is running in parallel. New Jersey has petitioned for review of the Third Circuit decision, Robinhood has petitioned on the Ninth Circuit decision, and Crypto.com's NADEX joined last week. The court can first consider the petitions at its 28 September conference ahead of the October term; the New Jersey petition was docketed on 9 September. Cases involving Kalshi and states are also pending in the Second, Fourth, Sixth and Seventh Circuits.

Delay Is the Product, and It Is Working

A petition the circuit grants fewer than one time in twenty is not filed to win; it is filed for the months between filing and denial. In those months Kalshi trades the busiest sports calendar of the year in the biggest state of the circuit under an appellate decision that says it should not, and Montana, which won, watches. The same logic explains the CFTC's motion in Connecticut, filed the day after the state's cease-and-desist orders, and the stay the agency's suit has imposed on Arizona's criminal case. The exchanges and their federal regulator have discovered that the procedural posture of the litigation is worth more than its merits, because every stayed ruling is a season of revenue. States have discovered the counter, which is the state court: Nevada and Washington did not wait for the federal question and are the only two enforcing.

Twenty-Eight September Is the Date That Matters

The Ninth Circuit's en banc decision, whenever it comes, will not settle anything, because the circuit split with the Third Circuit is what the Supreme Court exists to resolve, and three petitions now ask it to. If the court grants certiorari on either the New Jersey or the Nevada case at the long conference, every lower court will have a reason to hold its own proceedings, and the prediction markets will get the one thing they want most, a full term of uncertainty. If it denies, the circuit split stands, the states in the Ninth Circuit enforce and those in the Third do not, and the map of where sports contracts are legal becomes a map of appellate circuits. Either way, the answer to who regulates Kalshi is now a question for nine justices, and the petition filed last week was designed to make sure nothing happens before they speak.

Nevada won in August and cannot yet use it. That is the state of the law until the full Ninth Circuit or the Supreme Court says otherwise.