---
type: source
title: "Circuit Split Deepens: Third Circuit Pro-Kalshi, Ninth Circuit Skeptical, Fourth Circuit May 7 — SCOTUS at 64%"
author: "Bettors Insider / Multiple Sources"
url: https://bettorsinsider.com/sports-betting/2026/04/20/the-kalshi-legal-battle-is-heading-toward-the-supreme-court-heres-the-circuit-split-that-gets-it-there/
date: 2026-04-20
domain: internet-finance
secondary_domains: []
format: article
status: processed
processed_by: rio
processed_date: 2026-05-07
priority: high
tags: [prediction-markets, circuit-split, SCOTUS, kalshi, ninth-circuit, fourth-circuit, third-circuit, regulatory]
intake_tier: research-task
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

Comprehensive circuit split status as of April 20, 2026, synthesized from multiple sources.

**Third Circuit (Decided April 6, 2026):** 2-1 for Kalshi. Sports event contracts are "swaps" under CEA. CEA field-preempts state gambling laws for DCM trading. Judge Roth dissented: products "virtually indistinguishable from betting."

**Ninth Circuit (Oral argument April 16, 2026):** Panel includes Judges Ryan D. Nelson, Bridget S. Bade, Kenneth K. Lee (all Trump appointees). Strong skepticism. Nelson's Rule 40.11 comment: "That can't be a serious argument. It's self-certification. You can put up anything you want." Panel repeatedly questioned swap classification AND preemption AND Rule 40.11 application. Expected ruling: June-August 2026. Strongly signaling pro-state outcome.

**Fourth Circuit (Oral argument May 7, 2026 — TODAY):** Maryland district court denied Kalshi injunction (August 2025). Oral argument calendared for May 7 with William Havemann (Kalshi) and Max Brauer (Maryland). Expected to follow district court precedent → pro-state ruling. Expected ruling: July-September 2026.

**Sixth Circuit (Pending):** Intra-circuit split. Tennessee district pro-Kalshi (February 2026); Ohio district anti-Kalshi. Kalshi brief filed May 5, 2026. Ohio reply June 4. Expected ruling: September-October 2026.

**SCOTUS trajectory:** 64% probability of cert acceptance by year-end 2026. An explicit multi-circuit split effectively forces SCOTUS's hand.

**Non-sports markets:** No article or court discusses DAO governance, futarchy, or endogenous event contracts. All analysis exclusively focused on sports/election event contracts.

## Agent Notes

**Why this matters:** The circuit split is now moving decisively toward 2-1 or 3-1 pro-state, which means SCOTUS cert is near-certain by mid-2027. This is the dominant regulatory event horizon for internet finance — the SCOTUS case will define the CEA swap classification and preemption framework for an entire generation of financial products.

**What surprised me:** The speed. In three weeks (April 6 — May 7), the Third Circuit decided pro-Kalshi, the Ninth Circuit argued skeptically, and the Fourth Circuit argued (expected pro-state). The case is moving toward SCOTUS faster than any timeline from Session 1 of research.

**What I expected but didn't find:** Any mention of non-sports markets at any court level. The governance market gap holds across Third, Ninth, and Fourth Circuit proceedings.

**KB connections:**
- [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition because TWAP settlement against internal token price is endogenous rather than an external observable event]] — the SCOTUS case will define the swap/event contract framework for all financial products; MetaDAO's endogeneity argument will need to be evaluated against whatever framework SCOTUS establishes
- [[futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort that the Howey test requires]] — unrelated to the circuit split but the overall regulatory environment is relevant

**Extraction hints:**
1. Create a "SCOTUS prediction market case by 2027" timeline claim with concrete evidence (64% Polymarket probability, multi-circuit split dynamics).
2. Note the governance market gap as having now been confirmed across THREE circuit courts' full proceedings (briefs, arguments, related commentary) — this is a very strong pattern.

**Context:** The Ninth Circuit panel being all Trump appointees makes the result more surprising — prediction markets might have expected sympathy from a panel whose appointing president's 2024 election was heavily bet on Polymarket. But Nelson's skepticism suggests the rule-of-law concern about gaming contracts (Rule 40.11) transcended political sympathy.

## Curator Notes

PRIMARY CONNECTION: [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition because TWAP settlement against internal token price is endogenous rather than an external observable event]]
WHY ARCHIVED: Circuit split is the key regulatory context for when/how the event contract framework will be definitively established; the 39-session governance market gap is confirmed across all three circuit proceedings
EXTRACTION HINT: Extract the "39-session governance market gap confirmed across Third, Ninth, Fourth Circuit proceedings" as formal evidence of the structural regulatory invisibility of governance markets
