Kalshi has lost another major round in its fight to offer sports prediction markets nationwide.
The Sixth Circuit Court of Appeals ruled Friday that Kalshi has not shown its sports event contracts are swaps subject exclusively to Commodity Futures Trading Commission regulation.
Federal commodities law therefore does not prevent Ohio or Tennessee from enforcing their gambling laws against the company, the court held. The unanimous opinion, written by Senior Judge Julia Smith Gibbons, resolves appeals from conflicting lower-court decisions: an Ohio judge had denied Kalshi protection, while a Tennessee judge had granted it.
That makes the decision particularly consequential. The Sixth Circuit did not just add another loss to Kalshi’s docket. It took two states that had received opposite answers in federal district court and gave them the same answer on appeal. On the showing Kalshi made here, CFTC registration does not keep state gambling regulators out.
Two states, one appellate answer
Kalshi’s legal theory has underpinned its national sports business. It argues that its contracts trade on a federally regulated exchange, qualify as swaps under the Commodity Exchange Act and fall under the CFTC’s exclusive jurisdiction, not the licensing systems states apply to sportsbooks.
Ohio and Tennessee argue that contracts on sporting outcomes remain subject to their gambling laws regardless of the exchange on which they trade.
The district courts split. In Tennessee, Kalshi won a preliminary injunction blocking state enforcement while its case proceeded. In Ohio, it failed to obtain one. Friday’s Sixth Circuit decision rules against Kalshi on the central federal preemption question in both disputes, allowing the states to pursue enforcement.
That does not mean every Kalshi contract has been finally adjudicated illegal. This is litigation over preliminary relief and whether federal law blocks state action, not a final judgment resolving every potential state-law violation. But the immediate legal shield Kalshi sought is gone in Tennessee and remains unavailable in Ohio.
The appellate map turns against Kalshi
The ruling deepens a conflict that is already on the United States Supreme Court’s doorstep.
The Third Circuit sided with Kalshi in its New Jersey case in April, concluding at the preliminary stage that sports event contracts qualify as swaps and that federal law likely preempts New Jersey’s gambling enforcement. The Ninth Circuit reached the opposite result in Nevada in August, holding that Kalshi’s sports contracts are likely not swaps and allowing Nevada to regulate them under state gaming law. The Sixth Circuit has now joined the states’ side of that dispute in the Ohio and Tennessee cases.
A separate tribal gaming front also exists. Last week, the Ninth Circuit held that two California tribes are likely to succeed in arguing that Kalshi sports contracts entered from their lands constitute unauthorized Class III gaming under federal law. That court sent the case back for the district judge to consider the remaining preliminary injunction factors. It did not issue an injunction itself.
The Supreme Court question grows
New Jersey has petitioned the Supreme Court to review the Third Circuit ruling that favored Kalshi. Its request initially centered on the direct disagreement between the Third and Ninth Circuits over sports contracts and federal preemption. Friday’s Sixth Circuit decision makes the national divide harder to ignore: Kalshi has a favorable appellate ruling in one circuit and adverse rulings in two others.
The justices have not agreed to hear the New Jersey case. Kalshi can also seek further review of the Sixth Circuit decision. For now, though, the company’s practical problem is immediate: its claim to a single federal rule for sports event contracts is colliding with appellate decisions that leave states free to act.
Kalshi built its sports markets around the proposition that a CFTC-regulated exchange can list contracts nationwide. The Third Circuit accepted that argument at the preliminary stage. The Sixth and Ninth Circuits have not. Until the Supreme Court or Congress supplies a national answer, the business increasingly faces the state-by-state map it has been fighting to avoid.
