6th Circuit Lets 2 States Regulate Kalshi Sports Contracts as Gambling

3 articles · Updated · CNBC · Sep 25

A unanimous three-judge 6th Circuit panel ruled Ohio and Tennessee can enforce state gambling laws against Kalshi’s sports-event contracts, handing prediction markets a second appellate loss.
The court said Kalshi failed to show the contracts qualify as swaps under the Commodity Exchange Act and, even if they did, federal law does not preempt the states’ gambling rules.
The decision overturns a Tennessee district court win for Kalshi and reinforces an Ohio federal ruling for the states; Tennessee’s attorney general said Kalshi sought to evade sports-betting rules and taxes.
The split among appeals courts is deepening: the 9th Circuit backed Nevada last month, while the 3rd Circuit sided with New Jersey in April, setting up a possible Supreme Court fight over whether the CFTC or states control sports prediction contracts.

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$22 Billion in Limbo: Sixth Circuit Ruling Puts 87% of Kalshi’s Sports Contracts and U.S. Prediction Markets at Risk

Overview

Kalshi’s rapid growth after launching sports contracts in late 2024 made these products the core of its business by 2026. This success was threatened when the Sixth Circuit ruled on September 25, 2026, allowing Ohio and Tennessee to enforce state gambling laws, forcing Kalshi to block users in those states and putting its sports-driven revenue at risk. The ruling deepened a federal circuit split, as other courts had reached opposite conclusions about whether federal law overrides state gambling rules. With states and financial platforms now petitioning the Supreme Court, the industry faces major uncertainty amid a clash between federal oversight and state authority.

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