Sixth Circuit panel skeptical of Kalshi preemption claim in Ohio and Tennessee sports cases
A Sixth Circuit panel heard oral arguments Thursday on whether Kalshi's sports event contracts are shielded from Ohio and Tennessee gambling regulators by federal preemption. Judges pressed Kalshi on what is so bad about state regulation and appeared skeptical of the platform's legal argument. The hearing follows split lower-court decisions and drew participation from prediction market operators including Robinhood, Polymarket, Coinbase, and Crypto.com alongside Kalshi. No ruling was issued.
A negative Sixth Circuit ruling would strip Kalshi of its strongest federal shield in two more states. Judges questioned why state regulation would harm the platform, signaling they may not buy the preemption argument that has been rejected in Wisconsin and weakened in Michigan.
Ohio and Tennessee join the states where courts have cleared enforcement, Kalshi must geofence additional markets or absorb rising legal costs. Traders holding contracts they understood as federally backed face voiding risk where state courts act first. The Second Circuit now carries more weight as Kalshi's last hope for a single national standard, but that appeal may not resolve before more states pile on.
New York's attorney general opened the latest front in the multi-state campaign against federally registered prediction markets, joining Wisconsin, Michigan, Minnesota, and Ohio in courtroom fights that test whether CFTC registration blocks state gambling law.