Kalshi Suffers Legal Setbacks in Nevada & Montana
Jesse M. Cox Published 31/08/2026
Prediction market site Kalshi suffered a pair of legal setbacks in federal appeals courts in ongoing cases in two separate states. A Ninth Circuit Court panel in Montana ruled that a federal judge was within his discretion to dissolve a temporary injunction Kalshi had sought against the Montana Gambling Control Division.
In Nevada, the Ninth Circuit Court upheld a prior ruling that Kalshi's sports-event contracts are illegal sports betting and not derivative trading swaps, as Kalshi's lawyers claimed in court filings. That means Kalshi will be required to geofence its sports-event contracts or risk facing gambling enforcement penalties from the Nevada state regulator.
Nevada judges rule unanimously against Kalshi
The US Court of Appeals for the Ninth Circuit ruled 3-0 on August 28 that Kalshi's sports event contracts are bets, not swaps. The court rejected Kalshi's bid for federal preemption of Nevada gambling laws.
“KalshiEX, LLC advertises itself as ‘the first app for legal sports betting in all 50 states,’” Judge Ryan Nelson wrote in his ruling.
This decision enables Nevada to enforce state gaming laws against Kalshi. The ruling also denied Kalshi's request for injunctive relief. On parallel appeals, Robinhood Markets and Crypto.com also lost.
Kalshi must now geofence its sports-event contracts in Nevada. Failure to do so would mean the platform would face state gambling enforcement. This ruling also means that the federal regulator of prediction market sites, the Commodity Futures Trading Commission (CFTC), does not have the regulatory power to block this measure.
Kalshi suffers a double defeat in Montana
In Montana, the federal Ninth Circuit Court ruled against Kalshi's bid to reinstate a temporary injunction. The decision affirmed that a Montana federal judge did not abuse discretion in dissolving a preliminary injunction. The appeal panel found Kalshi failed to show a likelihood of success on the merits.
At the same time, a District Judge for the U.S. District Court for the District of Montana, Helena Division, denied Kalshi’s motion for a preliminary injunction. The injunction sought to prohibit Montana from enforcing its gambling laws against Kalshi's sports-event contracts.
Judge Donald W. Molloy ruled that Kalshi's repeated agreements to stay the case for months fatally undermined its ability to prove "irreparable harm". He denied Kalshi's request without prejudice.
State regulators are winning the battle with prediction markets
Both of these rulings were serious body blows to the prediction market site's case that sports-event contracts are not sports betting. In Nevada, Judge Kenneth K. Lee suggested that believing such a notion would be foolhardy.
"The more natural reading of 'event' under the statutory definition of a 'swap' would not include the outcome of a sporting event— even if a broad and literal definition of 'event' could encompass it," Judge Lee wrote in concurring with the ruling. "Few people would describe, say, the New York Mets’ latest loss of a game as an 'event.' Likewise, I do not think the outcome of a typical sports game is 'associated with a potential financial, economic, or commercial consequence' as required under the definition of a swap."
Montana is the 10th state cleared to pursue restrictions or bans on prediction market sports-event contracts.
Courts in Connecticut, Washington, Michigan, Wisconsin, New York, and Utah have also ruled against Kalshi in similar cases.