TLDR
- Kalshi added new appellate lawyers on September 8, just before a Ninth Circuit rehearing deadline
- The Ninth Circuit ruled against Kalshi on August 28, allowing Nevada to regulate its sports-event contracts
- The Third Circuit had already ruled the opposite way in Kalshi’s favor in a related New Jersey case
- The Supreme Court docketed New Jersey’s petition on September 8, asking justices to resolve the conflict
- Kalshi’s response to the Supreme Court petition is due October 8
Kalshi appears to be preparing for another round of litigation in the Ninth Circuit. On September 8, several attorneys from the law firm Milbank filed new appearances for Kalshi in its ongoing case.
The move came just days before the deadline to ask for a rehearing of an August 28 decision. That ruling allowed Nevada to regulate Kalshi’s sports-event contracts under state gaming law.
Adding new lawyers close to a filing deadline does not confirm what Kalshi plans to do next. But the timing has drawn attention from legal observers who track prediction market cases.
Gaming law attorney Daniel Wallach flagged the new filings on September 9. He suggested Kalshi may be preparing to ask the full Ninth Circuit to reconsider the panel’s decision, rather than going straight to the Supreme Court.
The August 28 ruling came from a three-judge panel in the case KalshiEX, LLC v. Assad. The panel found that Kalshi had not shown its sports contracts qualify as “swaps” under federal law.
That distinction matters. Kalshi’s legal argument relies on the idea that federal law overrides state gambling rules for these contracts.
The Circuit Split
The Ninth Circuit’s ruling directly conflicts with an earlier decision from the Third Circuit. In Kalshi’s New Jersey case, that court found the opposite conclusion, that Kalshi’s contracts do qualify as swaps.
The Third Circuit sided with Kalshi, ruling that federal law likely preempts New Jersey’s attempt to regulate the contracts as gambling. The Ninth Circuit considered that reasoning and rejected it.
This leaves two federal appeals courts with different answers to the same legal question, involving the same company and similar products. Legal experts call this a circuit split, and it often draws Supreme Court attention.
Supreme Court Involvement
On September 8, the Supreme Court docketed a separate petition from New Jersey. The case, Flaherty v. KalshiEX, LLC, asks the justices to review the Third Circuit’s decision, the one Kalshi won.
New Jersey filed the petition on September 2, after receiving an extension from Justice Samuel Alito. The Supreme Court has set Kalshi’s response deadline for October 8.
This creates an unusual position for Kalshi. The company lost in the Ninth Circuit but is now defending its win in the Third Circuit before the Supreme Court.
Wallach noted that amicus briefs supporting New Jersey, including some from tribal groups, are also expected by the October deadline.
If Kalshi seeks rehearing in the Ninth Circuit and wins, it could reduce or remove the ruling that favored Nevada. If the request is denied, the circuit split remains in place heading into the Supreme Court process.
Kalshi’s rehearing deadline in the Ninth Circuit falls on Friday, according to Wallach. The Supreme Court case will continue separately regardless of that outcome.
For now, Kalshi is positioned to fight on two fronts at once, asking one court to undo a loss while defending a win in front of the nation’s highest court.
