The U.S. Court of Appeals for the Sixth Circuit ruled against Kalshi on Sept. 25, saying Tennessee and Ohio can regulate its sports-event contracts under state gambling laws. The unanimous three-judge panel’s decision means Kalshi lost its bid to block enforcement while the disputes continue.
The ruling adds to conflicting federal appeals court decisions about whether states or the CFTC can oversee prediction markets. It also gives Tennessee and Ohio a basis to apply their gambling laws to the contracts at issue, rather than leaving them exclusively under federal derivatives regulation.
The Tennessee disputes over Kalshi event contracts and state gambling laws have become part of a wider fight over the company’s operating position in the U.S.
What the court decided
Kalshi had asked courts to block Tennessee and Ohio from enforcing their gambling laws against its sports-event contracts. Writing for the panel, Circuit Judge Julia Smith Gibbons said Kalshi had not shown that those contracts qualified as “swaps” subject exclusively to CFTC regulation.
The panel also concluded that the Commodity Exchange Act did not preempt either state’s gambling laws. It vacated a preliminary injunction issued by a Tennessee federal judge and upheld an Ohio federal judge’s denial of a similar injunction.
Those rulings affect the preliminary-relief requests, not every issue in the underlying disputes. The decision does not amount to a final resolution of all questions about how federal law applies to Kalshi’s markets.
The panel’s reasoning adds to the appellate split over state and federal authority. For Kalshi, the immediate consequence is that the preliminary court order blocking Tennessee enforcement is gone, while the Ohio request to block enforcement remains denied.
Conflicting rulings leave the question open
The Sixth Circuit’s decision follows earlier proceedings in federal courts in Tennessee and Ohio. Other appeals courts have reached different conclusions: the Ninth Circuit in San Francisco said in September that Kalshi’s contracts are subject to Nevada gambling laws, while the Third Circuit in Philadelphia ruled in April that its contracts are not subject to New Jersey’s gambling laws.
New Jersey has asked the Supreme Court to overturn the Third Circuit decision. With federal appeals courts now taking opposing positions, the dispute raises the possibility that the Supreme Court could eventually be asked to settle which regulator has authority.
The ruling’s scope is narrower than the broader prediction-market debate. These markets can cover sports, elections, weather and cultural events such as the Oscars, but the Sixth Circuit decision concerns the sports-event contracts before it.
Tennessee and Ohio are among the states seeking to crack down on platforms including Kalshi and Polymarket. Those efforts put the states at odds with the CFTC and the Trump administration, as the wider regulatory pressure on prediction markets continues to develop.
Kalshi expects further legal review
Kalshi said it does not expect the decision to survive further legal review. Spokesperson Dani Lever argued that state-by-state rules would create an unworkable patchwork and said Congress established a single federal regulator with nationwide rules.
Tennessee Attorney General Jonathan Skrmetti described the decision as a win for the state and said sports-wagering safeguards should remain in place. The office of Ohio Attorney General Andy Wilson did not immediately respond to requests for comment.
For now, the Sixth Circuit ruling leaves the preliminary-injunction results in place: Tennessee’s injunction has been vacated, and Kalshi’s request for similar relief in Ohio has been denied. The broader regulatory question remains unsettled, with New Jersey’s Supreme Court request and the conflicting appellate decisions still in view.
