Kalshi may seek an en banc rehearing before the U.S. Court of Appeals for the Ninth Circuit after losing a key ruling to Nevada, while the State of New Jersey has already asked the Supreme Court of the United States to review a related case involving the company’s sports-event contracts.
The potential strategy would allow Kalshi to challenge its Ninth Circuit loss while defending a separate victory before the Supreme Court of the United States.
New counsel enters Ninth Circuit case
On September 8, Milbank LLP attorneys Natasha Khan and Colleen Roh Sinzdak entered appearances for Kalshi in the Ninth Circuit litigation. The additions came shortly before the deadline to seek rehearing of the court’s August 28 decision in KalshiEX, LLC v. Assad.
The three-judge panel ruled that Kalshi had not shown a likelihood of success in arguing that the Commodity Exchange Act preempts Nevada’s authority to regulate its sports-event contracts under state gaming law. It also found that the contracts were not “swaps” under the relevant CEA provisions, weakening Kalshi’s position that the contracts fall under the CFTC’s exclusive jurisdiction.
The new appearances do not establish that Kalshi will file an en banc petition. However, gaming-law attorney Daniel Wallach said Kalshi “may be filing a petition for rehearing en banc in the Ninth Circuit instead of seeking cert from SCOTUS.”
A direct circuit split
The Ninth Circuit’s interpretation conflicts with the Third Circuit’s ruling in Kalshi’s New Jersey litigation. That court found that Kalshi’s sports-event contracts qualify as swaps traded on a designated contract market and concluded that Kalshi was likely to succeed in arguing that federal law preempts New Jersey’s attempt to regulate them as gambling.
The disagreement is direct. The Ninth Circuit considered and rejected the Third Circuit’s interpretation, leaving two federal appeals courts with opposing views on the same federal statutory framework and substantially similar Kalshi products.
New Jersey filed its petition for certiorari on September 2 after receiving extensions from Justice Samuel Alito, the circuit justice for the Third Circuit. On September 8, the Supreme Court of the United States docketed the petition as Flaherty v. KalshiEX, LLC, Case No. 26-299. Kalshi’s response is due October 8, as are amicus briefs supporting New Jersey, including briefs expected from tribes.
Two appellate fronts
The Ninth Circuit rehearing deadline arrives first, with Wallach identifying Friday as the deadline for filing. An en banc petition could give Kalshi an opportunity to remove or narrow an adverse precedent affecting the western United States. It could also eliminate the circuit split if the court changes the panel’s reasoning.
Alternatively, the Ninth Circuit could deny rehearing, grant it and issue a broader ruling against Kalshi, or deny the request with dissenting opinions that could support Kalshi’s position before the Supreme Court.
Both cases involve preliminary injunctions rather than final judgments, meaning neither is an ideal Supreme Court vehicle. The direct conflict, however, could still prompt review. New Jersey’s petition means Kalshi no longer needs to create its own route to the Supreme Court: it can contest its Ninth Circuit defeat while responding to a case based on a judgment it won.
