A Ninth Circuit panel ruled on Aug. 28 that Kalshi failed to show federal commodities law preempted Nevada's regulation of its sports-event contracts, letting the state keep enforcing its gaming rules. Days earlier, the CFTC settled an insider-trading case against a former White House teleprompter operator who traded prediction-market contracts on advance access to presidential speeches — together showing the agency winning enforcement fights even as its rulemaking authority comes under judicial pressure.
Ninth Circuit rejects Kalshi's preemption claim
The Ninth Circuit ruled unanimously that Kalshi had not shown Nevada's sports-contract rules were preempted, rejecting the exchange's argument that its sports-event contracts qualify as swaps under the Commodity Exchange Act. Kalshi contended that operating as a CFTC-regulated designated contract market gave it federal cover against Nevada's gaming laws.
The panel disagreed, finding the contracts likely fell outside the legal meaning of a derivatives swap because they functioned as sports bets. Circuit Judge Ryan Nelson wrote that "the CFTC is not a national gambling regulator," and the court rejected Kalshi's express, conflict and field-preemption arguments in turn. Nevada can now enforce its gaming laws against Kalshi's sports contracts while the case continues, though the panel sent Nevada's separate election-contract claims back to district court.
Circuit split raises the stakes for CFTC rulemaking
The Ninth Circuit's decision conflicts with a Third Circuit ruling that favored Kalshi in its dispute with New Jersey, a split that makes Supreme Court review more plausible, though not guaranteed. New Jersey faced a Sept. 3 deadline to seek further review of that Third Circuit decision.
That major-questions language did not invalidate the CFTC's pending proposal to amend Rule 40.11, which would add a 90-day review process for event contracts tied to gaming and other enumerated activities. Public comment on that proposal closed July 27, and the agency can still revise, finalize or withdraw it.
CFTC settles insider-trading case tied to prediction markets
While its rulemaking authority faces new legal risk, the CFTC has kept pursuing enforcement on the trading side. Gabriel Perez, a former White House teleprompter operator, must surrender $107,539.02 in prediction-market profits under a settled CFTC order, along with a $65,000 civil penalty and a three-year trading ban.
Regulators found that Perez traded presidential "mention market" contracts between December 2025 and February 2026, using advance access to speech text he saw before delivery to bet on whether the President would use specific words. Kalshi's surveillance team flagged and referred the trades to the CFTC, though the record does not establish how quickly that referral happened relative to when the trading occurred.
Sources: crypto.news, CryptoSlate
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