Nevada confronts Kalshi's en banc petition in the Ninth Circuit

KalshiEX, LLC asked the Ninth Circuit Court of Appeals to suspend its en banc rehearing petition until the Commodity Futures Trading Commission (CFTC) reviews the rule 17 C.F.R. § 40.11; the CFTC stated that the review should be completed in two months. On October 1, the State of Nevada responded in writing that Kalshi's request — submitted on September 25 — is "simply another attempt to delay" the ability to continue operations that Nevada considers illegal.

Kalshi's en banc petition and Nevada's response

Kalshi's en banc petition, filed on September 9, keeps in abeyance the enforcement of the panel's ruling from August 28. In its letter to the Ninth Circuit dated September 25, Kalshi requested that the court "grant or maintain" its petition until the CFTC publishes the revised version of 17 C.F.R. § 40.11; according to the company, the revised rule "would not impose a blanket prohibition" and would allow designated markets to list many contracts that certain states want to ban.

Nevada responded to this assertion in a two-page letter filed on October 1 in the matter KalshiEX, LLC v. Assad, No. 25-7516. The attorney signing the response is Nicole A. Saharsky from Mayer Brown. Nevada argues that the Court of Appeals "was already aware" that the CFTC planned to review section 40.11 when it issued its ruling and that the panel's decision did not legally depend on that rule.

"Kalshi's petition is simply another attempt to delay, to allow Kalshi to continue its illegal operations for as long as possible," writes Nicole A. Saharsky on behalf of Nevada.

Why Nevada claims the rule does not affect the panel's ruling

Nevada outlines three key arguments. First, the Ninth Circuit panel explicitly addressed the proposed amendment from June and determined that, until § 40.11(a) is amended, the existing regulation remains in effect. The court stated that the CFTC's proposal has no legal effect until it is finalized.

Second, the State asserts that the core of the panel's ruling is based on the statutory interpretation of the Commodity Exchange Act (CEA): the court held that event contracts are not "swaps" under the text, context, and purposes of the CEA. Nevada argues that section 40.11 was cited by the panel only to dismiss a point made by Kalshi and that a new version of the rule would not counter the other reasons provided by the court.

Third, Nevada presents a timeline of appellate decisions since August to show that most courts have rejected Kalshi's arguments: the Sixth Circuit's ruling on September 25 in favor of Ohio and Tennessee, and the Ninth Circuit's own decision on September 16 in Blue Lake Rancheria v. Kalshi regarding tribal lands.

Procedural timeline and parties involved

The docket shows that the en banc petition has halted the panel's mandate since its filing on September 9. Amicus briefs are noted from Paradigm (crypto investor), the Coalition for Prediction Markets, and an individual, Colin Skow, in addition to the two letters from Kalshi and Nevada.

Kalshi also filed a notice on September 25 in its appeal to the Fourth Circuit against Maryland regulators, signed by William Havemann from Milbank, requesting that the Maryland court "wait for the new regulation to come into effect" if it determines the relevance of Rule 40.11. Meanwhile, the CFTC indicated in a filing on September 24 in CFTC v. Johnson (No. 26-4281) that it expects the revised version of § 40.11 "to be finalized within the next two months"; the agency proposed the amendments on June 12.

What these maneuvers mean for the mandate and state enforcement

As long as the petition remains unresolved, the panel's mandate is not issued, and other states in the circuit cannot rely on that decision to enforce prohibitions against Kalshi. The CFTC also warned in its Arizona filing that mandates "may not be issued soon" and that, even if the petition were denied, Kalshi would likely seek a stay of the mandate while it requests certiorari from the Supreme Court.

Nevada applies its regulatory measures through state courts and loses less with the wait than other states in the circuit, which explains Nevada’s legal principles-centric stance rather than operational urgency.

The role of the Supreme Court and the immediate timeline

The Supreme Court did not include petitions regarding prediction markets in its early admissions on October 1; New Jersey's petition against the Third Circuit ruling still has a response deadline from Kalshi until November 9. In that New Jersey filing, lawmakers and regulatory associations presented amicus briefs.

Robinhood and Crypto.com also filed petitions regarding the Ninth Circuit's decision. In parallel, the CFTC submitted two rules on the definition of swap to the Executive Office of the President on September 28, but none have been published yet. The definition that could most affect the case would be the CFTC's own proposal to consider event contracts as "swaps", which is under government review and which, following the Supreme Court's decision in Loper Bright (2024), would not necessarily receive automatic judicial deference.

Where legal options stand now

The Ninth Circuit may deny the en banc petition "on the papers" based on what has already been submitted, according to the court's rules. If instead it decides to wait for the CFTC, it will extend the agency's two-month estimate into an additional delay: while the petition is alive, Kalshi continues to benefit from the stay of the mandate.

Renata Quiroga, Correspondent of betting markets, will continue to follow the evolution of the KalshiEX, LLC v. Assad case and the CFTC's regulatory movements throughout the fall, which will determine whether courts or the agency first define the scope of oversight over prediction contracts and sports betting.