A federal appeals court ruling could give Arizona more leverage in its dispute with Kalshi over whether sports-related contracts offered on a financial trading platform should be treated as bets or financial products.
The Ninth Circuit ruled in KalshiEX, LLC v. Assad that the federal Commodity Exchange Act does not prevent Nevada from regulating Kalshi’s sports event contracts as sports betting. The case centered on whether federal commodities law takes precedence over a state’s traditional authority to regulate gambling.
Arizona Attorney General Kris Mayes welcomed the decision, arguing that companies should not be able to avoid state gambling regulations simply by describing sports wagers as financial contracts. Her office is reviewing the ruling for its potential effect on Arizona’s ongoing litigation with Kalshi.
The ruling matters because sports betting has traditionally been regulated at the state level, with states and Tribal governments establishing licensing, consumer protections and other rules. Kalshi’s model has raised a different legal question by offering event contracts through the federal commodities market.
For Arizona, the dispute is ultimately about who gets to set the rules. Mayes’ position is that federal financial regulation should not displace the state’s longstanding authority over gambling, particularly as new betting products blur the line between gaming and financial trading.
