The Ninth U.S. Circuit Court of Appeals has ruled that gambling on sporting events is not protected by the federal law that otherwise allows prediction-market firms to operate, a decision that could give Arizona Attorney General Kris Mayes grounds to revive her state’s stalled 20-count criminal case against Kalshi. The ruling came in a separate Nevada dispute but directly undercuts the reasoning federal Judge Michael Liburdi used earlier this year when he blocked Arizona’s prosecution, according to Arizona Mirror.
Liburdi’s injunction stopped Mayes from prosecuting Kalshi for alleged violations of Arizona’s gambling laws and a separate state statute barring bets on election outcomes. That order relied on Liburdi’s own reading of the federal Commodity Exchange Act, under which sporting events qualified as “events” and “occurrences” subject only to Commodity Futures Trading Commission oversight. The Ninth Circuit’s Nevada ruling concerned a different but parallel dispute – whether state regulators there could bar Kalshi from offering sports-event trades, known in commodities markets as swaps.
The appellate panel upheld a lower court decision dissolving the injunction that had shielded Kalshi’s sports contracts from Nevada enforcement, concluding that sports events do not meet the statutory definition of a swap. The three Trump-appointed judges held that “event” and “occurrence” must carry independent meaning distinct from an event’s outcome – whether the Super Bowl happens is an occurrence, they reasoned, but who wins it is not. No fine, settlement, or final judgment attaches to either the Nevada or Arizona matter; the practical effect is that Arizona can now ask the Ninth Circuit or Liburdi to lift the injunction, and if that succeeds, the criminal case could resume.
A widening circuit split
The panel also invoked the major questions doctrine, rejecting any reading of the Commodity Exchange Act that would hand the CFTC sweeping authority over sports betting without explicit congressional authorization. That reasoning puts the Ninth Circuit squarely at odds with an earlier Third Circuit decision favoring Kalshi’s position, creating a documented circuit split over whether sports contracts are federally regulated swaps or state-regulated gambling.
Arizona had already appealed Liburdi’s ruling, but the Ninth Circuit paused that appeal pending its review of related cases testing state authority over Kalshi and other prediction-market operators. With the Nevada decision now resolved in states’ favor, that pause is expected to lift, teeing up further argument over the Arizona injunction and the broader federal-versus-state fight playing out across multiple circuits.
Mayes reviewing the decision
Mayes’s office said it was reviewing the ruling and characterized it as a significant win for states’ authority to regulate gambling, framing the decision as confirmation that labeling a sports bet a swap does not change its regulatory status. Her office has not indicated a timeline for seeking dissolution of the injunction, and the ruling leaves Arizona’s separate dispute over Kalshi’s election-related contracts unresolved.
Source: Arizona Mirror, reporting by Jim Small
Renata Kovacs has spent the better part of a decade following the regulatory shifts and licensing battles that define how gambling markets open, close, and evolve across Europe and beyond. She came up through the legal and compliance side of the industry before shifting her focus to journalism and analysis, giving her a perspective that sits closer to the operator room than the press box. Her coverage tends to cut through the noise and get straight to what a regulatory change actually means for the businesses and players involved.