A direct disagreement between two federal appeals courts is now heading toward the US Supreme Court, and it could decide who gets to regulate sports wagering-style products in America. The Third Circuit ruled in April 2026 that Kalshi's sports event contracts are swaps that federal law likely shields from New Jersey's gambling rules. The Ninth Circuit ruled on August 28 that those same contracts are sports bets that Nevada can regulate. New Jersey has now asked the justices to resolve the conflict.
This explainer walks through each ruling, the petition, who has weighed in, and why poker and sportsbook players should care even if they never trade a prediction contract.
The question in one sentence
Are Kalshi's sports contracts federally regulated swaps traded on a CFTC-registered exchange, which states cannot touch, or are they bets that states may license and police under their own gambling laws? Kalshi and the CFTC say swaps. New Jersey, Nevada and a long list of other states say bets.
The Third Circuit ruling (April 2026)
According to Legal Sports Report, the Third Circuit held that Kalshi's sports event contracts are swaps traded on a CFTC-registered designated contract market. It found the Commodity Exchange Act likely preempts New Jersey's gambling laws for these products. The ruling upheld a preliminary injunction that lets Kalshi keep operating in New Jersey without a state sports betting license.
The case is listed in court records as Flaherty v. KalshiEX, No. 26-299, and arises from the Third Circuit's April 6, 2026 decision in case 25-1922. Different outlets describe the caption slightly differently, with Legal Sports Report styling it KalshiEX v. Flaherty. New Jersey did not seek rehearing before the full Third Circuit. It asked for more time to prepare a petition for certiorari, and Justice Samuel Alito granted extensions that set the deadline for September 3.
The Ninth Circuit ruling (August 28)
On August 28, the Ninth Circuit went the other way. It ruled for Nevada and held that Kalshi's sports contracts are sports bets, not swaps, allowing Nevada to apply its gaming laws. It rejected the Third Circuit's reading of the Commodity Exchange Act.
Two lines of reasoning stand out in the reporting. First, the court reasoned that treating game outcomes as swaps would effectively federalize sports betting without clear direction from Congress. Second, it held that CFTC Rule 40.11 bars CFTC-registered exchanges from listing contracts involving gaming. The result is an explicit appellate split between the Third and Ninth Circuits.
The petition to the Supreme Court
New Jersey formally asked the Court to decide whether the CFTC's authority over event contracts prevents states from enforcing their gambling laws against Kalshi. Attorney General Jennifer Davenport said Kalshi and similar companies "refuse to follow the gambling laws of any State." She argued that dozens of states across the ideological spectrum have opposed these companies, and that Congress did not silently exempt sports betting from state law.
New Jersey's core claim is that Kalshi's sports contracts are unlicensed betting products subject to state gaming law. One source places the filing in early September, and another dates the docketing to September 8, so the exact date varies by outlet; the key point is that the petition is in front of the Court.
Who is backing New Jersey
The amicus support for the petition is broad. According to the reporting, briefs came from 39 states plus Washington, D.C., 146 tribes and tribal organizations, the NFL, and industry groups including the Casino Association of New Jersey. We looked at the league's involvement in our report on the NFL amicus brief.
The tribal participation is especially notable for poker players, because tribal gaming is a major part of the live poker and casino landscape in many states. Tribes hold exclusive rights in some jurisdictions, and a federal exemption for sports event contracts could be seen as undercutting the compacts that give them those rights. That is our reading of why tribes joined; the reporting we reviewed lists them as amici without elaborating their arguments.
What happens procedurally
The Supreme Court is not required to take the case. But a direct circuit split on a major federal preemption question makes review more likely, as Legal Sports Report observed. The next steps are for the Court to docket the petition, possibly request a response from Kalshi, and decide whether to grant certiorari.
Meanwhile, other cases continue in parallel. Kalshi has sought rehearing at the Ninth Circuit, and Robinhood has taken the Nevada fight to the Supreme Court as well, according to a DeFi Rate headline. We have not independently reviewed those filings, so treat them as developments to watch rather than established details.
State pressure keeps building
The split is not the only pressure on Kalshi. Utah filed a civil suit seeking restitution of fees worth $30.6 million to $61.2 million, as we detail in our Utah lawsuit report. Ohio has sent cease-and-desist letters to 10 prediction market operators, prompting Polymarket's Commerce Clause argument covered in our Polymarket Ohio report. And the CFTC has sued states to defend what it calls its exclusive jurisdiction over federally registered event-contract exchanges.
Why a poker site cares
At first glance, a fight about sports contracts looks irrelevant to a poker player. It is not, for three reasons.
1. It decides how "gaming" is defined. Poker's legal status in the United States has always turned on definitions and federal-state boundaries. A Supreme Court ruling about whether a game-outcome contract is gaming could inform future arguments across the industry. Our earlier analysis, CFTC event contracts, poker and the circuit split, explores the possible spillover.
2. It affects the sportsbook ecosystem next to poker. Many poker brands share accounts and wallets with sportsbooks. If unlicensed competitors can serve US customers without state licenses, licensed operators face a different cost structure. Our sportsbooks guide and the BetOnline sportsbook review show how offshore and licensed books compare.
3. It signals regulatory appetite. States that fight prediction markets are the same ones that decide whether to legalize online poker. For where each stands, see our US poker legalization map.
What could happen
There are three broad paths, none of which we can predict from the reporting:
- The Court declines. The split would remain, and Kalshi could operate under the Third Circuit's view in New Jersey and under the Ninth Circuit's view in Nevada, with other circuits free to choose.
- The Court grants and sides with Kalshi. States would likely lose the power to license or block federally registered event contracts on sports.
- The Court grants and sides with the states. Kalshi and similar platforms could face state-by-state licensing, and enforcement actions like Utah's would gain strength.
What to do as a player
- Stick to operators licensed in your jurisdiction, and verify the license before depositing. Our safe poker sites guide has a checklist.
- Do not treat a favorable lower-court ruling as the final word. The law here is unsettled.
- Follow responsible gaming tools. New Jersey just made them binding, as we explain in our report on its new rules.
Bottom line
Two federal appeals courts have read the same federal law and reached opposite conclusions about the same kind of contract. That is exactly the kind of conflict the Supreme Court exists to resolve, and the number and variety of parties lining up behind New Jersey show how much is at stake. Whether you play poker, bet sports or simply watch the regulatory fight, this is the case that could redraw the map.