Nevada Calls Kalshi's Bid to Wait for the CFTC "Just Another Attempt at Delay"

Kalshi has asked the Ninth Circuit to hold its rehearing petition until the CFTC rewrites its rule on gaming contracts, which the agency says will be final within two months. Nevada's answer is that the court already knew the rule was changing, and that the panel's ruling never depended on it.

• Nevada told the Ninth Circuit in a letter filed on 1 October that Kalshi's request to grant or hold its en banc petition until the CFTC revises 17 C.F.R. § 40.11 is "just another attempt at delay, so that Kalshi can continue its unlawful operations for as long as possible"
• Kalshi's letter of 25 September relied on a CFTC filing of the day before saying the revised rule should "become final within the next two months"; the same day Kalshi asked the Fourth Circuit, in Maryland's case, to "wait for the new regulation to go into effect" before deciding
• Nevada, represented by Nicole Saharsky of Mayer Brown, argues the panel held sports contracts are not swaps "based on the text, context, and purposes" of the Commodity Exchange Act and cited § 40.11 only to reject one of Kalshi's arguments
• The en banc petition, filed on 9 September, keeps the 28 August ruling from taking effect; the docket shows no order asking Nevada to respond to it
• The Supreme Court left prediction markets off its first grants of the term on 1 October, and Kalshi's response to New Jersey's petition is not due until 9 November

Kalshi Wants the Ninth Circuit to Wait for a Rule That Does Not Yet Exist

Nevada has told the US Court of Appeals for the Ninth Circuit that there is no reason to keep Kalshi's petition for rehearing en banc waiting. In a two-page letter filed on Thursday 1 October in KalshiEX, LLC v. Assad, No. 25-7516, the state's counsel Nicole A. Saharsky of Mayer Brown answered a letter Kalshi sent the court on 25 September. According to Nevada's account of it, Kalshi argued that because the Commodity Futures Trading Commission (CFTC) intends to revise its rule on event contracts involving gaming, 17 C.F.R. § 40.11, "within the next two months", the court should either grant rehearing or hold the petition until the CFTC publishes the revised rule. "Neither is warranted," Saharsky wrote. CDC Gaming first reported the exchange on Sunday.

Kalshi's Ninth Circuit letter is not publicly available, but a notice it filed the same day in its Fourth Circuit appeal against Maryland's regulators (No. 25-1892), signed by William Havemann of Milbank, sets out the argument. It says the proposed regulation "clearly would not impose a categorical bar, and instead would authorize designated contract markets to list many of the event contracts Maryland seeks to prohibit in this case", and asks that, "to the extent the Court believes that Rule 40.11 is relevant to this appeal", it "should wait for the new regulation to go into effect before issuing a decision."

The timetable came from the CFTC itself. In a filing on 24 September in its own Ninth Circuit case against Arizona, CFTC v. Johnson, No. 26-4281, the agency said it "expects that its revised version of 17 C.F.R. § 40.11 will become final within the next two months". The CFTC proposed the amendments on 12 June. Separately, it sent the White House two rules on the definition of a swap on 28 September, neither of which has been published.

Nevada Says the Rule Was Never the Basis of the Ruling

Saharsky's letter makes three points. First, the CFTC's intention is "nothing new": the panel "was well aware that the CFTC planned to revise Section 40.11 when it issued its decision." The opinion bears that out. It addressed the June proposal directly: "Until § 40.11(a) is amended in the manner described in the NPRM, it bars Kalshi's gaming-related contracts from being listed on a DCM. As of now, the existing regulation controls."

Second, Nevada says a new rule would not change the outcome. The panel held that sports event contracts are not swaps "based on the text, context, and purposes of the Commodity Exchange Act (CEA)", and cited § 40.11(a) only as one reason for rejecting Kalshi's argument that the CEA's Special Rule shows Congress meant the CFTC to regulate such contracts. A revision, "even if it survives judicial challenge", would not disturb the court's other reasons on that point, or its holding that the CEA contains no "clear congressional authorization" for the CFTC to regulate sports betting.

Third, Nevada called the request "just another attempt at delay", and pointed to the run of appellate decisions since August: the Sixth Circuit's 25 September ruling for Ohio and Tennessee and the Ninth Circuit's own 16 September decision in Blue Lake Rancheria v. Kalshi on tribal lands. "This weight of authority confirms that the Court's decision is correct and that there is no reason to wait to deny Kalshi's petition," the letter concludes.

Where the Petition Stands

Kalshi petitioned for panel rehearing and rehearing en banc on 9 September, which stayed the panel's mandate. Since then the docket shows amicus briefs from the crypto investor Paradigm, the Coalition for Prediction Markets and an individual, Colin Skow, and the two letters. Under the Ninth Circuit's rules a response to an en banc petition is not permitted unless the court asks for one, and rehearing is ordinarily not granted without such a request. As of 1 October the docket shows no order requesting one.

At the Supreme Court, the first grants of the new term, published on Thursday 1 October after the justices' long conference, did not include New Jersey's petition on the Third Circuit's Kalshi ruling, InGame reported. That was expected: the docket for New Jersey's petition, No. 26-299, shows Kalshi has until 9 November to respond, and gaming legislators and regulators' associations have filed amicus briefs. Robinhood and Crypto.com have also petitioned on the Ninth Circuit's Nevada decision.

Nevada's Strongest Point Is That the Panel Already Priced In the Rule Change

The panel did not overlook the CFTC's proposal; it addressed it and said proposed regulations have no legal effect. Kalshi is asking the en banc court to treat a predictable event, the proposal becoming final, as new. The Fourth Circuit notice shows why: it reads the proposal as something that "would authorize" exchanges to list many of the contracts states want to ban, a federal permission the courts have said is missing. But the Ninth Circuit's central holding is about the statute, not the regulation: if sports event contracts are not swaps under the CEA, a rule about which swaps an exchange may list does not reach them. The rule that could matter more is the CFTC's separate proposal to define event contracts as swaps, which is still at the White House, and on which, since the Supreme Court's 2024 decision in Loper Bright, courts would not have to defer to the agency's reading of the statute.

A Pending Petition Is Worth More to Kalshi Than a Decided One

Every week the petition sits, the panel's mandate stays unissued, and the other states in the circuit cannot rely on the decision to enforce. The CFTC made the same point in Arizona's case, telling the court on 24 September that the mandates "may not be issued any time soon" and that, even if the petition is denied, Kalshi "would likely show good cause to stay the mandate" while it seeks certiorari. Nevada, which like Washington enforces through its own state courts, loses less from the wait than the other states in the circuit, which may be why its letter is framed around principle rather than urgency. Its claim that "the vast majority of courts" have rejected Kalshi's arguments holds for the appellate record since August, though the Third Circuit's April ruling for Kalshi still stands.

The Supreme Court Will Not Settle This Before Winter

With Kalshi's response in the New Jersey case due on 9 November, the earliest the justices could consider that petition is late in the year, and InGame notes that the court may first ask the Solicitor General for the government's view, which would push any decision further out. That leaves the Ninth Circuit's handling of the en banc petition, and the CFTC's rulemaking, as the two moves that can change the position in Nevada and the rest of the circuit this autumn. Kalshi wants the second to arrive before the first. Nevada wants the court to decide before either.

The court can deny the petition on the papers it already has. If it waits for the CFTC instead, Kalshi will have turned a two-month rulemaking estimate into the latest season of delay.