Kalshi, Polymarket lose bid to pause state gambling suits

Kalshi and Polymarket lost bids on Friday to pause gambling cases brought by Nevada and Washington, leaving both prediction-market operators to face active state enforcement while their appeals continue. In three orders, the Ninth Circuit refused to freeze the suits, undercutting the companies’ effort to use federal commodities law as a shield against state gambling oversight.

According to Bloomberg Law, the appeals court denied stays pending appeal in Nevada actions against Kalshi and Polymarket and in a Washington case against Kalshi. The companies may keep arguing over where the disputes belong. They no longer have the benefit of stopping the state cases while that fight unfolds.

Friday’s setback goes beyond scheduling. Both companies have tried to frame event contracts as a matter of federal market oversight, not state gambling law. The orders do not settle that larger dispute, but they show the argument is not enough at this stage to halt enforcement. Operators expanding across states could still find themselves answering local regulators one jurisdiction at a time.

On preemption, the panel left little room for spin. In a passage cited by The Block, the judges said the companies’ Commodity Exchange Act defense could not by itself create federal-question jurisdiction.

“The CEA preemption defense is an affirmative defense, which cannot by itself give rise to federal question jurisdiction.”
— Ninth Circuit panel

Dry language, real consequence. The court did not have to decide whether Kalshi or Polymarket may eventually win on preemption. It only had to decide whether the defense was enough to stop the cases now. It was not, and that keeps legal pressure on both platforms.

A separate Polymarket argument failed as well. The Block reported, citing the order, that the panel did not view the company’s claimed compliance with federal law as proof it was acting under a federal officer, a theory that could have opened a different jurisdictional route.

“Polymarket’s actions merely demonstrate its own compliance with federal law, which cannot alone show that it is acting under a federal officer.”
— Ninth Circuit panel

What the ruling changes

These orders do not answer whether either company can offer the disputed contracts in Nevada or Washington. Their effect is narrower and immediate: state regulators can keep pressing the cases while the appeals move ahead. That shift matters because delay itself was part of the companies’ strategy.

State officials also got a broader procedural win. The CFTC still sits at the centre of how event contracts are structured, yet Friday’s ruling suggests states can still force court fights over whether those contracts stray into gambling law. For operators, that points to a patchier map of legal risk, especially in jurisdictions willing to test the boundary between derivatives regulation and betting enforcement.

The appeals remain alive, and the Ninth Circuit did not decide the merits of the federal-versus-state argument. Even so, one of the clearest short-term protections Kalshi and Polymarket wanted is gone. For a business built on national access, the near-term message is plain: the state cases keep moving, and the cost of proving a federal shield has gone up.