6Th Circuit lets Ohio and Tennessee police Kalshi sports-event contracts under gambling laws
The unanimous panel said Kalshi failed to show the products are CFTC-jurisdiction “swaps,” sharpening a split with the 3rd Circuit.
A unanimous 6th US Circuit Court of Appeals panel ruled Ohio and Tennessee can regulate Kalshi’s sports-event contracts under state gambling laws. The decision adds to a growing appellate split over whether the CFTC’s derivatives regime preempts state gaming enforcement for event-based contracts.
6Th Circuit Sides With Ohio and Tennessee on Kalshi Sports Contracts
The 6th US Circuit Court of Appeals ruled against Kalshi on Friday, holding that Ohio and Tennessee can regulate the company’s sports-event contracts under their state gambling laws. The decision came from a three-judge panel that sided unanimously with the two states.
The panel’s key move was jurisdictional. It found Kalshi failed to demonstrate its sports-event contracts are “swaps” under the jurisdiction of the Commodity Futures Trading Commission.
That matters because Kalshi’s core framing is federal. If the contracts are treated as CFTC-regulated derivatives, the company has a cleaner argument that state gambling regulators are boxed out by federal law. The 6th Circuit did not accept that showing on this record, and the practical result is that state gambling-law authority remains live in Ohio and Tennessee for these products.
For traders, this is not an abstract turf fight. A prediction market is a marketplace where participants buy and sell contracts whose payoff depends on the outcome of a future event. Sports-event contracts are the highest-volume use case, and they are also the most politically legible target for state enforcement. The 6th Circuit outcome increases the odds that access is constrained by where you are, not just what the federal rulebook says.
Circuit Split Deepens After 9th Circuit Alignment and 3rd Circuit Divergence
The 6th Circuit ruling did not land in a vacuum. It followed a similar finding from the 9th Circuit Court of Appeals last month, reinforcing the idea that at least some appellate courts are comfortable letting states treat these sports-event contracts as gambling products rather than federally supervised derivatives.
The split is clearer because the 3rd Circuit pointed in the other direction earlier this year. In April, the 3rd US Circuit Court of Appeals allowed Kalshi to do business in New Jersey while its appeal proceeds, after that court said Kalshi was likely to succeed on its argument that federal law preempts New Jersey’s regulations.
That is the setup for Supreme Court pressure. When circuits diverge on federal preemption, the market stops getting one answer and starts getting three. The question is not just who wins a single case. It is whether event-contract platforms can scale nationally under a CFTC umbrella, or whether they have to negotiate a state-by-state map that can change with local politics.
Political signaling is already moving in that direction. On Wednesday, a group of state lawmakers filed an amicus brief with the US Supreme Court urging it to weigh in on the dispute between Kalshi and state gaming authorities, with the explicit aim of resolving whether state authorities or federal agencies have jurisdiction over prediction market companies.
The next catalysts are procedural, not narrative.
Kalshi has not confirmed in the available record that it has filed a petition for certiorari, which is the request asking the Supreme Court to review a lower court decision. If Kalshi does file, the petition will likely lean on the circuit split between the 6th and 9th Circuits versus the 3rd Circuit’s preemption posture in New Jersey.
Watch for Supreme Court docket activity connected to the lawmakers’ amicus brief, including whether it is tied to a specific case and whether related filings start to cluster around the jurisdiction question. Separately, watch for follow-through at the state level in Ohio and Tennessee now that the 6th Circuit has explicitly left room for state gambling-law regulation.
Why This Jurisdiction Fight Matters for US Event-Contract Access
The threshold that matters is whether the Supreme Court is forced to answer one clean question: are these sports-event contracts meaningfully “swaps” under CFTC jurisdiction, or are they gambling products that states can police even when a platform argues federal coverage.
If the 6th and 9th Circuit posture holds while the 3rd Circuit continues to treat federal preemption as likely, the setup starts to look structural rather than narrative-driven. That is when “access” becomes a routing problem across jurisdictions, and the real edge shifts from product design to legal survivability.
