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The Sixth U.S. Circuit Court of Appeals ruled against Kalshi on Friday, September 25, holding that states may regulate prediction markets under their gambling laws. The Cincinnati-based court rejected Kalshi's argument that CFTC designation preempts state authority over its sports event contracts. The decision directly conflicts with other circuits and exposes the federally regulated platform to a patchwork of state-level restrictions.
Why this matters?
Kalshi must now geofence Ohio and Tennessee while fighting parallel preemption battles in Nevada, Connecticut, Baltimore, and Missouri. The Sixth Circuit's reasoning—that CFTC designation does not automatically exempt sports contracts from state gaming laws—matches the Ninth Circuit's tribal-land approach and emboldens attorneys general with active proceedings to file copycat suits.
Each new loss compounds legal spend faster than any single case resolves. Traders hold positions whose validity shifts with state borders. The Supreme Court remains Kalshi's only path to uniform rules. Crypto.com and Robinhood petition Supreme Court to settle sports event contract preemption adds platform-side pressure for a cert grant, but every month of delay risks another state closing its market while the question stays open.
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