Sixth Circuit rules states can regulate Kalshi, handing win to horse racing interests
The U.S. Sixth Circuit Court of Appeals ruled against Kalshi on September 27, holding that states can regulate prediction markets. The decision, brought by horse racing interests, found Kalshi operates in a manner that conflicts with the racing sector. It marks a second circuit loss for Kalshi's federal preemption defense, after the Circuit ruled similarly in late August. No further case details were available.
Kalshi's federal preemption shield is now cracked in two circuits. The Ninth Circuit stripped it in Nevada; the Sixth Circuit just did the same for a broader state-regulation holding. Ohio and Tennessee already enforce gaming laws directly against Kalshi's sports contracts under the same circuit's prior ruling. Other state attorneys general will cite this precedent to expand oversight. Kalshi must now geofence at least five jurisdictions while fighting copycat cases elsewhere.
Legal spend compounds faster than any single case resolves. Traders hold positions whose validity shifts with state borders. The Supreme Court remains Kalshi's only path to uniform rules, but platform-side pressure for a cert grant is building. Each new loss fragments national sports markets further and pushes rival platforms to fortify their own state-law defenses before suits reach them.
The Sixth Circuit ruling becomes Kalshi's third federal preemption loss this month, after the Circuit blocked its sports contracts on two California tribal lands and in Nevada, leaving the platform geofenced in five jurisdictions with no uniform federal shield remaining.