Kalshi Loses Sixth Circuit Appeal Over Ohio, Tennessee Bans
A three-judge panel of the U.S. Sixth Circuit Court of Appeals unanimously rejected Kalshi's argument that federal commodities law shields its sports event contracts from state gambling enforcement, a ruling reported this week that clears Ohio and Tennessee to enforce their own gambling laws against the prediction-market platform.
What the court decided
Kalshi has argued in multiple states that because it's registered with the Commodity Futures Trading Commission and offers its sports contracts as regulated "swaps," federal law preempts states from treating those contracts as illegal sports betting. The Sixth Circuit disagreed, finding that Kalshi's sports-event contracts don't have the financial characteristics required to qualify as swaps under the Commodity Exchange Act in the first place. The panel wrote that unlike contracts tied to financial values or instruments, Kalshi's sports contracts carry only downstream economic consequences — reasoning that undercuts the core of the company's nationwide legal strategy.
The ruling overturns a prior injunction that had blocked Tennessee from enforcing its gambling law against Kalshi, and separately upholds a lower court's denial of a preliminary injunction Kalshi had sought in Ohio. The court also rejected Kalshi's argument that complying with state-by-state geofencing would be too technically difficult and expensive, noting that a costly compliance burden doesn't amount to an impossible one.
Where this leaves the broader legal fight
Ohio regulators have separately proposed a $5 million fine against Kalshi, and lawsuits in both Ohio and Tennessee remain ongoing even after this appellate ruling. The decision deepens an existing split among federal appeals courts: the Third Circuit previously sided with Kalshi in its dispute with New Jersey, while the Ninth Circuit has sided with state regulators in cases involving Nevada and California. Nationally, states have now won the large majority of preliminary rulings in this wave of litigation against prediction-market platforms offering sports contracts.
That circuit split is widely seen as increasing the odds the question eventually lands before the U.S. Supreme Court, following a similar trajectory to the Ninth Circuit's Nevada ruling covered in our earlier report on the looming Supreme Court fight over Kalshi's sports contracts.
Why it matters to bettors
For bettors in Ohio and Tennessee, the ruling means state regulators now have a clearer legal path to enforce existing gambling laws against Kalshi's sports-event markets, which could affect access to those products in both states while the underlying cases continue. More broadly, the decision adds to a growing body of case law that state gaming regulators — not just federal commodities regulators — have real authority over how sports-outcome contracts are treated, a question that has direct implications for how prediction markets and licensed sportsbooks compete for the same betting dollar going forward.