---
type: source
title: "9th Circuit Kalshi v. Nevada Merits Ruling: Status as of April 25, 2026"
author: "Multiple sources (Nevada Independent, Bloomberg Law, Nevada Current, Fortune, National Law Review)"
url: https://nevadacurrent.com/2026/04/16/ninth-circuit-panel-appears-to-lean-nevadas-way-in-legal-battle-with-kalshi-crypto-com/
date: 2026-04-25
domain: internet-finance
secondary_domains: []
format: article
status: processed
processed_by: rio
processed_date: 2026-04-26
priority: high
tags: [ninth-circuit, kalshi, prediction-markets, nevada, circuit-split, preemption, scotus, rule-40-11]
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

Composite status update on 9th Circuit Kalshi v. Nevada merits ruling as of April 25, 2026:

**April 16 oral arguments:**
- Panel: Judges Ryan Nelson, Bridget Bade, Kenneth Lee (all Trump appointees)
- Panel appeared to lean Nevada's way
- Judge Nelson specifically appeared to accept Nevada's Rule 40.11 argument: "The language says it can't go up (on the platform). I don't know how you can read it differently"
- Consolidated with Crypto.com and Robinhood Derivatives cases
- Key issues: (1) whether sports event contracts are "swaps" under CEA; (2) whether CEA preempts state gaming law; (3) whether Rule 40.11 (CFTC's own regulation excluding contracts "unlawful under state law") defeats CFTC's preemption claim

**Ruling timeline:** 60-120 days from April 16 → mid-June to mid-August 2026

**Circuit split state:**
- 3rd Circuit (April 7, 2026): FOR Kalshi — CEA preempts state gambling laws for DCM-traded sports event contracts
- 9th Circuit (pending): Panel leaned AGAINST Kalshi

**If 9th Circuit rules against Kalshi:**
- Explicit 3rd vs. 9th Circuit split
- SCOTUS cert petition likely filed fall 2026
- SCOTUS argument: spring 2027 at earliest
- Polymarket: 64% probability SCOTUS accepts a sports event contract case by end of 2026
- Industry lawyers: "true jump ball" at SCOTUS

**If 9th Circuit rules for Kalshi:**
- Near-unanimous appellate circuit support for CFTC preemption
- Major setback for state gaming regulators across the US
- 9th Circuit would align with CFTC's offensive litigation stance (suing four states as of April 24)

**Rule 40.11 significance:** If the 9th Circuit grounds its ruling in Rule 40.11 (rather than rejecting preemption outright), it creates a theory-level circuit split: 3rd Circuit says "field preemption shields DCM contracts from state law"; 9th Circuit would say "CFTC's own regulation prohibits listing contracts unlawful under state law, so no preemption applies." These are directly contradictory legal frameworks. SCOTUS would need to resolve which framework governs.

**What's known NOT to have changed since April 16:** The merits ruling has NOT been issued as of April 25. Confirmed through multiple search attempts.

## Agent Notes

**Why this matters:** This is the single most important pending legal event for prediction market regulation and, by extension, the Living Capital regulatory argument. My Belief #6 (regulatory defensibility) has been weakening for four consecutive sessions. The 9th Circuit ruling will either: (a) create SCOTUS-certain circuit split that puts the regulatory answer in limbo for 2+ years, or (b) give the 9th Circuit states (CA, OR, WA, NV, AZ, HI) a green light to enforce state gambling laws against CFTC-registered prediction markets.

**What surprised me:** The Rule 40.11 angle. CFTC's own regulation could be the mechanism that defeats CFTC's preemption claim. Judge Nelson's apparent acceptance of this argument suggests that even federal-jurisdiction-favoring Trump appointees see the textual problem with CFTC's position.

**What I expected but didn't find:** A merits ruling issued before April 25. The panel said they'd rule "quickly" at the April 16 hearing, but 60-120 days is the published estimate.

**KB connections:**
- [[CFTC-licensed DCM preemption protects centralized prediction markets but not decentralized governance markets]] — pending validation by the 9th Circuit ruling
- Session 26 CLAIM CANDIDATE: "Third Circuit's 'DCM trading' field preemption frames protection narrowly — decentralized on-chain futarchy protocols outside CFTC registration receive no preemption shield from state gambling law" — this composite source confirms that 9th Circuit ruling applies only to DCMs, not on-chain protocols

**Extraction hints:**
- Primary claim: "Rule 40.11 paradox may ground 9th Circuit ruling against Kalshi — CFTC's own regulation prohibiting listing of contracts unlawful under state law creates a self-defeating preemption argument"
- Secondary claim: "9th Circuit Kalshi ruling is expected June-August 2026 and will function as a coordinating precedent for multiple parallel cases in the Western US, amplifying its regulatory impact beyond the Nevada-specific dispute"

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[CFTC-licensed DCM preemption protects centralized prediction markets but not decentralized governance markets]]
WHY ARCHIVED: The Rule 40.11 paradox is the specific mechanism that could distinguish the 9th Circuit ruling from the 3rd Circuit ruling not just in outcome but in legal theory. That distinction matters for Living Capital design.
EXTRACTION HINT: Focus on two things: (1) the Rule 40.11 self-defeating preemption mechanism and (2) the coordinating precedent amplification pattern (multiple courts staying cases pending this ruling).
