What's happened
The Sixth U.S. Circuit Court of Appeals has ruled that Ohio and Tennessee can regulate Kalshi's sports-event contracts under state gambling laws. The court found Kalshi’s contracts do not meet the statutory definition of “swap” and rejected the argument that federal law preempts state gambling rules. The decision adds to a circuit split on the issue and follows recent rulings in other circuits.
What's behind the headline?
What this means for Kalshi and bettors
- The Sixth Circuit’s ruling clarifies that state gambling laws can apply to Kalshi’s sports-event contracts, even if those contracts are structured as event-derived financial instruments.
- A key question remains whether such contracts qualify as swaps under the CEA; the court’s decision rejected that characterization for Kalshi’s offerings in this case.
- The decision reinforces a growing circuit split on whether prediction markets fall under federal or state authority, increasing pressure on Congress and potentially the Supreme Court to resolve the framework.
Implications for regulators and users
- States may move more aggressively to regulate or restrict Kalshi’s offerings within their borders.
- Kalshi and other platforms face ongoing legal uncertainty as various courts weigh similar questions, potentially affecting user access and compliance costs.
What’s next
- Further appeals or petitions to the Supreme Court could shape the national regulatory regime for prediction markets.
How we got here
The ruling follows ongoing disputes over whether prediction-market platforms like Kalshi operate under federal oversight or state gambling regulations. Kalshi has faced lawsuits from multiple states seeking to enforce local gambling laws against its sports-event contracts, while the CFTC argues for exclusive federal jurisdiction. Previous decisions across the Third and Ninth Circuits have differed, creating a divide among federal appellate courts that could attract Supreme Court review.
Our analysis
- Ars Technica: reporting on the Sixth Circuit ruling and its legal rationale; highlights the impact on state gambling laws and federal preemption. - CNBC: provides context on the broader circuit split and the potential path to the Supreme Court; includes remarks on the CFTC’s stance. - Al Jazeera: discusses the regulatory debate and implications for other markets like Polymarket, and notes state-level actions.
Go deeper
- Will other circuits follow the Sixth Circuit’s approach or diverge further?
- How might a Supreme Court ruling change the regulation of Kalshi and similar platforms?
- What should bettors consider about access and legality across states?
More on these topics
-
Tennessee - US State
Tennessee, officially the State of Tennessee, is a state in the southeastern United States. Tennessee is the 36th largest by area and the 16th most populous of the 50 states.
-
Ohio - US State
Ohio is a state in the East North Central region of the Midwestern United States. Of the fifty states, it is the 34th largest by area, the seventh most populous, and the tenth most densely populated. The state's capital and largest city is Columbus.
-
Kalshi - American prediction market platform
Kalshi Inc. is a prediction market platform based in Manhattan, New York City, that launched in July 2021. The platform is used primarily for sports betting, which constitutes more than 90% of site activity and 89% of revenue in 2025. Analysts describe activity on the platform as "heavily tied to the sports calendar". Individuals can place bets on other future outcomes, including economic indicators, weather patterns, awards, political and legislative outcomes, and military conflicts. The site has been involved in several controversies and lawsuits regarding the legality of its sports and election markets, the ethics of allowing wagers on sensitive geopolitical issues, and insider trading involving politicians. Concerns over election integrity and declining public trust in the democratic process caused by election betting have been raised by consumer advocacy groups and politicians. As a result, the United States Senate banned its senators and their staff from betting on prediction markets such as Kalshi in May 2026. According to the site, there are 2.9 unprofitable users for each profitable one. John M. Sides has challenged whether Kalshi efficiently and accurately aggregates information...
-
New Jersey - US State
New Jersey is a state in the Mid-Atlantic region of the Northeastern United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware River and Pennsylvania;
-
New York - US State
New York is a state in the Northeastern United States. New York was one of the original thirteen colonies that formed the United States. With more than 19 million residents in 2019, it is the fourth-most-populous state.
-
Supreme Court of the United States - Court
The Supreme Court of the United States is the highest court in the federal judiciary of the United States of America. It has ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law, and original jurisdict
-
Nevada - US State
Nevada is a state in the Western United States. It is bordered by Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east.
-
Commodity Futures Trading Commission (CFTC) - Agency
The Commodity Futures Trading Commission is an independent agency of the US government created in 1974, that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.