Kalshi Presses 6th Circuit Appeal Over Sports Contracts as $17 Billion Betting Market Hangs in Balance
Updated
Updated · The National Law Review · Aug 20
Kalshi Presses 6th Circuit Appeal Over Sports Contracts as $17 Billion Betting Market Hangs in Balance
2 articles · Updated · The National Law Review · Aug 20
Summary
A 6th Circuit panel has heard Kalshi’s appeal over Ohio and Tennessee efforts to block its sports event contracts, with judges probing whether the products are meaningfully different from ordinary sports betting.
Kalshi argues the Commodity Exchange Act gives the CFTC exclusive authority over trading on federally registered exchanges and preempts state gambling enforcement against its contracts.
That argument faces mixed lower-court results: a Tennessee federal judge granted a preliminary injunction for Kalshi, while an Ohio judge found it was unlikely to win on its preemption theories.
The appeal could tee up Supreme Court review because the 3rd Circuit already sided with Kalshi in a similar case, while disputes are also spreading through the 4th and 9th circuits.
The stakes reach beyond one lawsuit: U.S. sports betting is a $17 billion industry, Kalshi’s sports contracts drive most of its revenue, and Congress and the CFTC are both weighing new rules.
Will the Supreme Court crown prediction markets as the new kings of sports betting, bypassing state gambling laws entirely?
Could a federal loophole allow teenagers to legally wager on sports injuries disguised as sophisticated financial derivatives?
$36 Billion Lawsuit and the Fragmented Future: How Kalshi’s Prediction Markets Sparked a Federal-State Legal War
Overview
In July and August 2026, the legal fight over prediction markets exploded as New York filed a $36 billion lawsuit against Kalshi after federal courts denied the company's requests for protection. Kalshi warned the CFTC of a looming market emergency, prompting the CFTC to use emergency powers to keep Kalshi running under federal rules. Meanwhile, states like Rhode Island and Washington took their own enforcement actions, forcing Kalshi to deploy advanced geofencing to block users. As Congress introduced new bills to classify prediction markets as gambling, Kalshi shifted its business toward crypto derivatives and secured major funding, highlighting the high stakes and uncertain future of the industry.