Sixth Circuit judge asks Kalshi what is so bad about state regulation
A Sixth Circuit judge asked Kalshi during oral arguments Thursday what was so bad about state regulation, suggesting skepticism toward the platform's argument against state-level oversight of its sports event contracts. The exchange came during Kalshi's appeal seeking to block state gambling enforcement against its CFTC-registered sports offerings. The panel appeared ready to side with states over the platform. The case extends Kalshi's losing streak on preemption in multiple jurisdictions.
A negative ruling would strip Kalshi of its most promising federal shield as state enforcement spreads. The platform already faces active or threatened action in New York, Wisconsin, Michigan, Washington, and New Mexico without a working preemption defense. Each additional state loss forces geofencing decisions market by market and voids existing trader contracts where courts rule first.
Legal costs and compliance complexity now compound faster than any single appeals court can resolve. The Second Circuit appeal on New York preemption remains Kalshi's last path to a national standard, but that court may not act before more states pile on. Kalshi must build around state gambling law as the practical floor, not the federal order it registered under. Polymarket faces identical exposure, since both platforms share CFTC registration and the same state playbook.
Builds on the Sixth Circuit's parallel skepticism in the Ohio and Tennessee sports cases, where a panel already signaled doubt about Kalshi's federal preemption claim.