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Kalshi could soon file a petition for review with the US Supreme Court after the Ninth Circuit declined to afford it protection from enforcement in Washington.
The United States Supreme Court is already awaiting one petition related to a dispute between Kalshi and government officials for a state government, but another one could soon be filed after the US Ninth Circuit Court of Appeals issued its latest decision in State of Washington v. Kalshi on Thursday. The Ninth’s ruling denied Kalshi’s request for an emergency stay of that litigation pending appeal, which could prompt Kalshi to ask the Supreme Court for review because of the stakes the company faces within the Ninth’s jurisdiction.
The stay denial effectively keeps the disputes between Kalshi and the states of Nevada and Washington in the respective state court systems, where attorneys general and gaming regulators have challenged the legality of Kalshi’s operations along the lines of gambling laws. The consequences of this denial are especially serious for Kalshi in Nevada.
Ninth Circuit finds Kalshi’s stay request inadequate to grant relief
The May 21 order from the Ninth Circuit finds fault with Kalshi’s request for a stay in State of Washington v. Kalshi on the grounds of demonstrating a strong probability that its case will succeed on the merits and that the litigation moving forward in Washington state courts will do irreparable harm to Kalshi. As a result, the state’s case against Kalshi will move forward pending any federal intervention.
That case is a civil action accusing Kalshi of violating Washington’s consumer protection and gaming laws. In the action, Washington Attorney General Nick Brown has asked the state court to declare Kalshi’s exchange in violation of the cited statutes and issue a permanent injunction blocking the platform from operating within the state.
With this decision, the panel from the Ninth Circuit has fulfilled its commitment to rule on the stay request promptly. However, this decision may not be the final word on the matter.
Inevitable path for Kalshi petition to Supreme Court materializing
While Kalshi can technically request an en banc review of this ruling from the full Ninth Circuit, a more likely appeal option for Kalshi at this point is to ask the US Supreme Court to review the panel’s ruling. That appeal will likely bear urgency because of parallel actions in other states the Ninth oversees.
Also within the Ninth’s jurisdiction is the state of Nevada, where enforcement actions have progressed further than they have in Washington. Nevada state courts have already ordered Kalshi to pause trading on its event contracts for people in the state and have extended that order.
Without federal court protection or injunctive relief from a higher court in Nevada, Kalshi may have to face the full reality of compliance with that order as the case plays out in Nevada’s state court system. The US Supreme Court could be Kalshi’s final chance to prevent that, even on a temporary basis.
However, the Supreme Court may be close to taking up a related but separate case, as New Jersey authorities intend to appeal an unfavorable decision for them from the US Third Circuit Court of Appeals. Kalshi’s potential supplication in concert with that action could emphasize the circuit split that is pivotal to the Supreme Court agreeing to take up reviews.
If Nevada and Washington are ultimately successful in restricting Kalshi’s activity within their borders, other state governments may look to replicate the strategy. Another state attorney general has already started down that path.
Rhode Island attorney general sues Kalshi and Polymarket
Also on Thursday, Rhode Island Attorney General Peter F. Neronha announced a lawsuit in state court that named Kalshi and Polymarket as defendants. The complaint alleges that the exchanges are violating Rhode Island’s gaming laws and asks the court to enjoin the platforms from offering trading of contracts related to sporting events in the state.
Supreme Court review and a favorable opinion could afford Kalshi some relief in civil actions like those that Neronha has initiated. Barring such results, Kalshi must deal with the fallout of the Ninth Circuit’s decision in Nevada and Washington. But it will likely not do so without a fight.
Derek Helling
Derek Helling is a journalist who has covered the gaming industry for many publications since 2018. His coverage emphasizes the intersections of gambling with the business of entertainment, the evolution of the legal landscape, technology’s shaping of gaming, and the impact of gambling on society. When he isn’t working on his next story, he enjoys traveling with his wife and spoiling their pair of Munchkin cats.
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