Kalshi Suffers Back-to-Back Losses in Two Federal Appeals Courts

In its legal fight against state efforts to regulate prediction markets, Kalshi faced two adverse outcomes in federal appeals courts. The Ninth Circuit Court of Appeals rejected Kalshi's petitions for both panel rehearing and rehearing en banc in the Nevada case, in a ruling dated November 3.

Kalshi argues that event contracts are financial products subject to federal regulation. The company says that state classification of these contracts as gambling would create overlapping legal obligations. According to Kalshi, the Nevada ruling could expose the company to civil and criminal liability risks despite its operation under federal oversight.

Following the rejection of its petitions, the company has 90 days to take the case to the Supreme Court. Until that period expires, the appeals court ruling remains in effect, and Nevada regulators may continue enforcement against Kalshi's sports markets.

In a separate case, the Second Circuit Court of Appeals rejected a request by Kalshi and Coinbase to halt enforcement actions. The ruling covers Kalshi's lawsuits with the New York State Gaming Commission and the Connecticut Department of Consumer Protection, as well as Coinbase's lawsuit against Connecticut Attorney General William Tong. The three-judge panel found that the companies had not shown the conditions necessary for a preliminary injunction. As a result, New York and Connecticut may continue enforcement actions while the appeal proceeds.