Montana pauses Kalshi enforcement while Ninth Circuit rehearing petition is pending

Montana has agreed to suspend enforcement action against Kalshi’s event contracts while the Ninth Circuit considers whether to conduct further review of its recent Nevada decision on the company’s sports markets.

Under a joint stipulation, the state will pause enforcement, investigations and cease-and-desist proceedings. Kalshi will drop its Montana lawsuit for as long as that non-enforcement arrangement remains in effect, according to ReadWrite.

The pause lasts until the later of two possible outcomes: the denial of further Ninth Circuit review, or an en banc decision by the full appeals court. Once that period ends, Montana must give Kalshi 30 days’ written notice before taking action.

The arrangement is tied to Kalshi’s Sept. 9 petition for rehearing of the Ninth Circuit’s Aug. 28 ruling in a consolidated Nevada case. It is a procedural agreement, rather than a settlement of the underlying question of whether state gambling laws can be applied to Kalshi’s contracts.

In its Aug. 28 opinion, the Ninth Circuit affirmed the dissolution of a preliminary injunction that had blocked Nevada from enforcing state law against Kalshi’s sports-related contracts. The court found that Kalshi had not shown it was likely to succeed on its argument that the Commodity Exchange Act pre-empted Nevada’s gaming regulations.

The panel concluded that the sports contracts at issue were sports bets rather than "swaps" under the Commodity Exchange Act. That conclusion meant the law’s express protection for swaps traded or executed on a designated contract market did not shield the contracts from Nevada regulation.

The court also rejected Kalshi’s arguments that Nevada law conflicted with the federal commodities regime or that Congress had occupied the field. It remanded the case in part for the district court to consider Nevada’s challenges to Kalshi’s election contracts consistently with the opinion.

A concurrence by Judge Kenneth K. Lee broadly agreed with the majority’s statutory analysis, while questioning whether the court needed to resolve that issue. Judge Lee wrote that a CFTC regulation, 17 C.F.R. § 40.11, already barred gaming contracts.

The agreement gives Kalshi temporary protection from Montana action while the company pursues further appellate review, followed by a 30-day notice period before the state may resume enforcement.