Kalshi Asks Ninth Circuit to Wait on CFTC Rule 40.11. Nevada's Lawyers Say No.

A new court filing shows just how heated the fight over Kalshi's sports contracts has become. On October 1, 2026, the law firm Mayer Brown sent a letter to the Ninth Circuit opposing Kalshi's request for a rehearing. The case is KalshiEX, LLC v. Assad, No. 25-7516. The letter's message is simple: a coming CFTC rule change won't alter the outcome.

Here's what the letter says, why it matters, and what to watch next.

How the Kalshi Ninth Circuit Case Got Here

On August 28, 2026, the Ninth Circuit ruled that sports event contracts likely are not "swaps" under the Commodity Exchange Act. That means the CFTC's exclusive jurisdiction doesn't shield them from Nevada's gaming laws. The panel included Judges R. Nelson, Bade, and Lee, and Judge Ryan Nelson wrote the opinion.

Kalshi pushed back. On September 9, it asked for a panel rehearing and a rehearing en banc, which means asking the full court to take another look. Courts rarely grant these requests.

On September 25, Kalshi sent a follow-up letter. It said the CFTC plans to revise 17 C.F.R. § 40.11 "within the next two months." Kalshi argued the court should either grant rehearing or hold the petition until the new rule is out.

Mayer Brown's October 1 letter is the answer to that request.

What Is CFTC Rule 40.11?

Rule 40.11 is a CFTC regulation. Section 40.11(a) bars registered exchanges from listing contracts that involve certain activities, including gaming. Kalshi is a registered exchange, so the rule applies to it directly.

The panel relied on this rule. It noted that the CFTC never started a review of Kalshi's sports contracts. Even so, the court said the published rule already prohibits Kalshi from listing them. If the CFTC rewrites the rule, Kalshi hopes the ruling loses some of its support.

Nevada's Three Main Arguments

The letter makes three points against waiting.

1. The CFTC's plan is nothing new

The letter says the CFTC's intent to revise Section 40.11 is "nothing new." The Ninth Circuit already knew about the planned revision when it issued its decision, and it said so on pages 35 and 36 of the opinion. In the letter's view, the CFTC's latest statement only hints at timing. It adds no new facts.

2. The rule is just one piece of the ruling

The letter argues the decision doesn't hinge on Section 40.11. The court found that sports event contracts are not swaps based on the text, context, and purposes of the Commodity Exchange Act. It cites pages 17 to 33 and 37 to 41 of the opinion.

Section 40.11(a) appeared in only one spot. Kalshi had argued that the "Special Rule" in 7 U.S.C. § 7a-2(c)(5)(C) shows Congress wanted the CFTC to oversee sports event contracts. The court rejected that for several reasons, and one was that Section 40.11 bans those contracts.

Then comes the letter's strongest point. Even a revised rule that survives a legal challenge wouldn't undo the court's other reasons. It also wouldn't change the broader holding that the Act contains no "clear congressional authorization" for the CFTC to regulate sports betting.

3. It's a delay tactic

The letter calls Kalshi's argument "just another attempt at delay." It says the aim is to let Kalshi keep operating for as long as possible. That's advocacy from a party on the other side, so read it as Nevada's framing, not a neutral finding.

Other Courts Have Ruled Against Kalshi Too

The letter points to two recent decisions:

• Sixth Circuit: In KalshiEX LLC v. Schuler (Sept. 25, 2026), the court found the Act likely does not preempt state gaming law.

• Ninth Circuit: In Blue Lake Rancheria v. Kalshi, Inc. (Sept. 16, 2026), another panel ruled against Kalshi in a case involving tribal gaming.

The letter says "the vast majority of courts" have rejected Kalshi's arguments. Kalshi has won some rulings, so treat that as Nevada's characterization.

A Circuit Split With Big Stakes

This fight reaches well beyond Nevada. The Third and Ninth Circuits now disagree on whether sports event contracts are swaps under exclusive CFTC jurisdiction. New Jersey, Robinhood, and Crypto.com have all asked the Supreme Court to settle it.

If the Ninth Circuit granted en banc rehearing, the panel opinion could be vacated and the split would shrink. If it denies rehearing, the split stays in place and the case moves closer to the Supreme Court.

Why Rule 40.11 Is the Pressure Point

The question may come down to one thing. Is Rule 40.11 the main support for the panel's reasoning, or just one of several?

Kalshi says a rewritten rule would knock out a key premise. Nevada says the decision rests on statutory text and congressional intent, so no agency rewrite changes the answer.

One detail adds fuel. The panel said it would not accept Kalshi's reading "until § 40.11(a) is amended." Kalshi will lean on that phrase. Nevada will counter that the opinion's main holding goes well beyond the rule.

What Traders Should Watch

If you follow or trade sports event contracts, keep an eye on these four things:

1. The Ninth Circuit's decision on rehearing. It could grant, deny, or hold the petition. A hold would help Kalshi on timing.

2. The revised Rule 40.11. The CFTC has pointed to a window of roughly two months. Watch for the actual text and whether it addresses gaming contracts head-on.

3. The Supreme Court petitions. New Jersey, Robinhood, and Crypto.com are all seeking review.

4. State enforcement. Some states have paused action while the rehearing request is pending. Others may not wait.

In Summary

Kalshi is trying to buy time and reshape the legal ground under its sports contracts. Nevada's counsel is telling the Ninth Circuit that no rule revision touches the core of the August 28 decision.

The court hasn't ruled on rehearing yet. This story is still developing, and we'll update this page as the court and the CFTC act.