Nevada Urges Ninth Circuit Not to Delay Decision on Kalshi En Banc Petition

Nevada asked the US Court of Appeals for the Ninth Circuit to deny KalshiEX, LLC’s request to hold its rehearing petition en banc while the Commodity Futures Trading Commission rewrites 17 C.F.R. § 40.11. The state filed a two-page letter on 1 October arguing Kalshi’s 25 September request is "just another attempt at delay" intended to let the exchange continue operations pending rulemaking that the CFTC says should be final within two months.

Kalshi en banc petition and Nevada’s immediate response

Kalshi filed a petition for panel rehearing and rehearing en banc on 9 September, which stayed the Ninth Circuit panel’s 28 August mandate. The en banc petition has kept the panel decision from taking effect while the court considers whether to rehear the case. Nevada responded on 1 October through Nicole A. Saharsky of Mayer Brown, telling the court there is no reason to hold the petition for the CFTC’s rule change.

Nevada’s letter stresses three points. It says the panel was already aware the CFTC planned to revise § 40.11 when it issued its decision, that the panel’s central holding did not depend on § 40.11, and that Kalshi’s request is an effort to prolong unlawful activity. The state pointed to a string of appellate decisions since August to support its position.

Why Nevada says the CFTC rule does not change the ruling on Kalshi

Nevada notes the panel’s opinion addressed the June CFTC proposal directly and made clear proposed rules have no legal effect. The panel held sports-event contracts are not swaps under the Commodity Exchange Act "based on the text, context, and purposes" of the statute, and it cited § 40.11(a) only to reject one of Kalshi’s arguments about the CEA’s Special Rule. Nevada argues a final revision to § 40.11 would not alter the court’s statutory analysis or its conclusion that Congress did not clearly authorise the CFTC to regulate sports betting.

The state emphasised that even if a revised § 40.11 survives judicial challenge, it would not disturb the panel’s other reasons for finding such contracts outside the CFTC’s swap authority.

The CFTC timetable Kalshi cited and what it means

Kalshi’s letter of 25 September asked the Ninth Circuit to grant or hold its en banc petition until the CFTC published a revised § 40.11. That request rested on a CFTC filing of 24 September in CFTC v. Johnson in which the agency said it "expects that its revised version of 17 C.F.R. § 40.11 will become final within the next two months." The CFTC proposed the amendments on 12 June and separately transmitted two rules on the definition of a swap to the White House on 28 September; neither of those two rules has been published.

Kalshi made a parallel filing in the Fourth Circuit, in its appeal against Maryland regulators, arguing the proposed regulation "would authorise designated contract markets to list many of the event contracts Maryland seeks to prohibit in this case" and asking that the Fourth Circuit wait for the new regulation before deciding.

The appellate context: other courts and pending petitions

Since the Ninth Circuit panel decision, several appellate outcomes have affected the litigation posture. The Sixth Circuit ruled for Ohio and Tennessee on 25 September, and the Ninth Circuit decided Blue Lake Rancheria v. Kalshi on 16 September in a way Nevada cites as consistent authority. The Third Circuit’s April ruling for Kalshi remains unreversed.

At the Ninth Circuit docket for KalshiEX, LLC v. Assad, No. 25-7516, amicus briefs have come from Paradigm, the Coalition for Prediction Markets and an individual, Colin Skow. Under Ninth Circuit rules, a response to an en banc petition is not permitted unless the court asks for one; as of 1 October the docket showed no order requesting a responsive filing.

The Supreme Court’s initial grant list on 1 October did not include New Jersey’s petition asking review of the Third Circuit’s Kalshi decision. Kalshi has until 9 November to respond to New Jersey’s petition, and other industry players such as Robinhood and Crypto.com have separately petitioned on the Ninth Circuit’s Nevada decision.

"Just another attempt at delay, so that Kalshi can continue its unlawful operations for as long as possible," Nevada wrote in its 1 October letter, assigning motive to Kalshi’s request.

Strategic stakes for Kalshi and the circuit

Kalshi benefits from a pending petition; each week the en banc request remains unresolved keeps the panel mandate unissued and limits enforcement across the circuit. The CFTC told the Ninth Circuit on 24 September that mandates "may not be issued any time soon" and predicted Kalshi would likely show good cause to stay any mandate while seeking Supreme Court review.

Nevada, which enforces through its own state courts similarly to Washington, framed its response on principle. The state argued the "weight of authority" from recent appellate rulings supports denial of rehearing and that there is no procedural justification to hold the petition pending an agency rule that is not final.

What to watch next: court timing and rulemaking

Two moving parts can change the legal landscape in the coming months: the Ninth Circuit’s handling of the en banc petition and the CFTC’s rulemaking on § 40.11 and the definition of a swap. Kalshi wants the agency’s final rule to arrive before the Ninth Circuit decides; Nevada wants the court to act on the papers it already has. With Kalshi’s deadline to respond in the New Jersey Supreme Court petition set for 9 November, any Supreme Court involvement is unlikely to resolve the dispute before winter.

For market participants and litigation observers, the immediate implication is procedural: a denial of the en banc petition on the papers would let the panel decision proceed; a hold to await a final CFTC rule would extend the status quo and keep the panel mandate stayed.