The prediction market operator wants an appeals court to hold its rehearing fight with Nevada until the regulator rewrites the rule on which event contracts are allowed. Nevada is opposing. Four more deadlines arrive before the end of October.
Kalshi's legal strategy is turning on a rule that has not been rewritten yet.
The company has asked the U.S. Court of Appeals for the Ninth Circuit to hold its rehearing proceedings in its dispute with Nevada until the Commodity Futures Trading Commission completes a revision of Rule 40.11. Nevada, represented by lawyers from Mayer Brown, has filed in opposition.
Rule 40.11 is the CFTC regulation that lists categories of event contracts an exchange may not list, including contracts involving gaming and those the agency finds contrary to the public interest. How the commission rewrites it bears directly on the central question in the Nevada case: whether sports and other event contracts traded on a federally regulated exchange fall under CFTC authority or under state gaming law.
Why waiting helps Kalshi
The logic of the request is straightforward. If the CFTC's revision clarifies that the contracts in dispute are permitted under federal rules, Kalshi's argument that federal law preempts state gaming regulation becomes stronger. A court ruling issued before the revision would be decided on the old text. Nevada's opposition reflects the mirror image: the state has every reason to want a decision on the current record.
A crowded October
The Ninth Circuit request sits inside a dense calendar. Kalshi's volume-incentive program is due to end no earlier than Oct. 13. A response is due Oct. 14 at the Supreme Court in case No. 26-338. Missouri's attorney general, who has been in discussions with Kalshi, has a deadline in mid-October. In Illinois, a proposed injunction is due on Oct. 29.
Any one of those could reset the regulatory map. Together they mean the next four weeks will shape whether event contracts are regulated mainly in Washington or state by state.
Meanwhile, the markets keep trading
The legal fight has not slowed trading in the contracts most watched by investors. Kalshi's market on a quarter-point Federal Reserve rate increase in October held at 17 to 18 cents through the weekend, last trading at 17 cents early Monday. The figure is closely watched as a real-time read on rate expectations ahead of the Fed's Oct. 27 to 28 meeting.
Brazil's election offered another reminder of the product's appeal and its limits. Kalshi's contract on Lula winning the most first-round votes traded above 70 cents until polls closed on Sunday and fell to a fraction of a cent overnight as Flávio Bolsonaro finished first.
What to watch: The Ninth Circuit's decision on whether to hold the case, and any CFTC action on Rule 40.11 before the Oct. 14 Supreme Court deadline. A hold granted by the court would signal that judges see the regulator's rewrite as relevant to the outcome.