US appeals court rules Kalshi sports contracts fall outside CEA swaps definition
A federal appeals court ruled that Kalshi's sports event contracts are not swaps under the Commodity Exchange Act, affirming that states may enforce their own gambling laws against the platform. The decision marks the second appellate ruling against Kalshi on this issue and sets up a likely Supreme Court appeal. Kalshi's defense that CFTC registration preempts state gambling law now faces a deepening circuit split across federal jurisdictions.
Kalshi must now geofence additional states or restructure its sports offerings to comply with state gambling statutes. The ruling strips away another piece of the federal shield the platform leaned on to operate nationwide under CFTC oversight alone. Other CFTC-regulated venues face identical exposure.
The circuit split deepens after the Sixth Circuit's Ohio and Tennessee ruling, pressuring the Supreme Court to resolve whether states can override federal registration. Legal spend compounds across parallel cases while traders hold positions whose validity shifts with state borders. Kalshi's national sports market fragments further with each new state-level defeat.
This is the third appellate ruling against Kalshi's federal preemption defense in under two months, after the Ninth Circuit's August tribal-lands decision and the Sixth Circuit's Ohio-Tennessee ruling, cementing a circuit split that pushes the platform toward Supreme Court review.