Sixth Circuit rules Kalshi sports contracts subject to Ohio and Tennessee gambling laws
The Sixth U.S. Circuit Court of Appeals ruled against Kalshi on Friday, allowing Ohio and Tennessee to enforce their gambling laws against the CFTC-regulated prediction market platform. The court held that Kalshi had not adequately shown its sports event contracts qualify as swaps under the Commodity Exchange Act. The decision deepens an existing circuit split over whether federal commodities law preempts state gambling regulation of event contracts.
Kalshi's preemption shield is now gone in two circuits, and state attorneys general elsewhere have a ready template to copy. Each new state suit multiplies defense costs and fragments national markets into geofenced patches where contracts trade in some states but not others. The NFL has already backed New Jersey's Supreme Court bid to cement the state-gambling framing.
Kalshi must now choose between expensive geofences, product redesign, or fighting parallel suits without guaranteed federal backup. The CFTC's pending swap-rule proposal remains in White House review, slower than courtroom clocks where platforms are losing. The first operator to lose another major state case sets the compliance bar every competitor races to clear.