Sixth Circuit rejects Kalshi's argument that sports contracts are financial swaps
The Sixth Circuit ruled unanimously Friday that Kalshi's sports event contracts are not swaps under the Commodity Exchange Act. The panel rejected Kalshi's argument for exclusive federal CFTC jurisdiction, clearing Ohio and Tennessee to regulate the contracts under state gambling law. The decision widens an existing circuit split over how prediction market products should be classified and exposes Robinhood and Crypto.com to identical state oversight.
Kalshi's federal preemption shield is gone in the Sixth Circuit. The platform must now geofence Ohio and Tennessee or pursue state gambling licenses. Robinhood and Crypto.com face identical exposure, which is why both joined Supreme Court petitions seeking a national resolution. Each new circuit loss invites more state attorneys general to file copycat suits.
Legal spend compounds across parallel cases faster than any single case resolves. Traders hold positions whose validity shifts with state borders. A Supreme Court grant would halt the geofence cascade. A denial leaves platforms fighting fifty potential gaming commissions with precedent running against them. The first state to win on the merits becomes precedent every gaming commission copies.
Second federal circuit to reject Kalshi's preemption theory, joining the Ninth Circuit's Nevada and California tribal rulings and deepening the coast-to-coast pattern that Crypto.com and Robinhood's Supreme Court petition now asks the justices to resolve.