Finance · updated 1h ago · 2 min read
6th Circuit Rejects Kalshi’s Sports Contracts, Letting Ohio And Tennessee Enforce Gambling Rules
Sixth Circuit unanimously held states may regulate Kalshi's sports-related event contracts under state gambling laws. The ruling deepens federal-circuit split over whether federal or state regulators oversee Kalshi's contracts.
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9 of 10 outlets skipped it: state regulators partly act over tax and age (18 vs 21) differences.
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Sixth Circuit Rejects Kalshi
The 6th U.S. Circuit Court of Appeals in Cincinnati unanimously rejected Kalshi’s argument that its sports-related event contracts are “swaps” subject exclusively to federal oversight by the Commodity Futures Trading Commission.
Judge Julia Smith Gibbons wrote that “contracts tied to outcomes such as soccer corner kicks do not clearly serve the financial risk-management purposes associated with derivatives regulated under federal commodities law.”
The appeals court also ruled that federal commodities law does not prevent Ohio and Tennessee from enforcing their gambling regulations, deepening a split that could reach the Supreme Court.
Reuters said the decision vacated a preliminary injunction previously issued against Tennessee and upheld a similar denial in Ohio, as Kalshi faced another legal setback.
Kalshi spokesperson Dani Lever said the ruling shows “exactly why a state-by-state approach does not work,” arguing that prediction markets cannot operate effectively when rules differ across state lines.
State vs Federal Jurisdiction
The 6th Circuit’s unanimous panel sided with Ohio and Tennessee on regulating Kalshi’s sports-event contracts under state gambling laws, and it found Kalshi failed to show its contracts meet the legal definition of a “swap.”
The opinion said, “We hold that Kalshi has not shown that its sports-event contracts satisfy the statutory definition of a 'swap' so as to fall within the scope of the CFTC's 'exclusive jurisdiction,'” according to CNBC.
Even if the contracts were swaps, the court held that the Commodity Exchange Act does not preempt Ohio’s or Tennessee’s gambling laws, overturning a Tennessee federal district court ruling that had sided with Kalshi.
Jonathan Skrmetti welcomed the outcome, saying, “Kalshi attempted an end run around Tennessee law to avoid any of the rules or taxes associated with sports gambling. They failed.”
Kalshi spokesperson Dani Lever argued that “Courts can’t agree on the basics: Some say federal law covers these contracts, and others say it doesn’t,” framing the dispute as a jurisdictional patchwork.
Circuit Split Raises Supreme Court
The ruling adds to a growing divide among federal appeals courts over whether state regulators or the CFTC should have authority over prediction market event contracts.
Reuters said the 9th Circuit in San Francisco ruled last month that Kalshi’s event contracts are subject to Nevada’s gambling laws, while the 3rd Circuit in Philadelphia ruled in April that Kalshi’s contracts are not subject to New Jersey’s gambling laws.
New Jersey asked the Supreme Court to overturn the 3rd Circuit decision, and Reuters said the latest appeals court ruling raises the potential that the U.S. Supreme Court may decide to settle the matter.
Cointelegraph reported that a group of state lawmakers filed an amicus brief urging the Supreme Court to weigh in on the case between Kalshi and state gaming authorities.
Kalshi said it does not expect the decision to survive further legal review, while the CFTC did not immediately respond to a request for comment, leaving the next steps tied to higher-court review.