A federal appellate panel has cleared the way for Ohio and Tennessee to apply their sports-wagering statutes to Kalshi, a prediction markets operator that lists contracts tied to sporting outcomes.
On September 25, 2026, a three-judge panel of the US Court of Appeals for the Sixth Circuit held that the company’s sports-event contracts do not qualify as “swaps” under the Commodity Exchange Act and that, even if they did, federal commodities law would not displace the two states’ gambling rules.
Kalshi runs a designated contract market overseen by the Commodity Futures Trading Commission (CFTC).
After it began listing sports-related event contracts in early 2025, regulators in both states signaled enforcement.
Ohio’s Casino Control Commission and Tennessee’s Sports Wagering Council treated the products as unlicensed sports betting.
Kalshi sued, arguing that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps traded on such markets and therefore preempts conflicting state gambling laws.
The lower courts split.
A Tennessee district judge granted Kalshi a preliminary injunction, concluding the contracts were swaps and that state rules created an intolerable conflict with federal requirements.
An Ohio district judge denied similar relief, finding that Kalshi had not shown the contracts met the statutory definition of a swap and that preemption was unproven.
The Sixth Circuit resolved both appeals in a single opinion written by Senior Judge Julia Smith Gibbons and joined by Judges Eric L. Clay and Rachel S. Bloomekatz.
The panel first examined the statutory definition of a swap.
It emphasized that Congress designed that category around instruments used to manage financial, commercial, or economic risk—contracts linked to interest rates, commodity prices, or similar values. Sports-event contracts, the court said, lack that connection.
Their payoffs turn on athletic results rather than financial variables, and any economic effects are at most indirect.
Treating them as swaps, the judges wrote, would stretch CFTC authority far beyond the purposes Congress had in mind and could even criminalize ordinary wagering that has long been left to the states.
Even assuming the contracts were swaps, the court held that the Commodity Exchange Act does not expressly or impliedly occupy the field of sports-gambling regulation or create an irreconcilable conflict with Ohio’s and Tennessee’s statutes.
Those laws, the panel reasoned, exercise traditional state police power over gambling and only incidentally affect trading on a federally designated market.
Exclusive federal jurisdiction over swaps does not strip states of authority to impose licensing, consumer-protection, or location requirements that happen to touch the same activity.
The practical result is immediate.
The Sixth Circuit affirmed the Ohio district court’s denial of an injunction and vacated the Tennessee injunction, remanding that case for further proceedings. State regulators may now pursue enforcement without the earlier court-ordered pause.
The decision widens an existing circuit split: the Third Circuit had previously sided with Kalshi in a New Jersey dispute, while the Ninth Circuit had ruled for Nevada.
That disagreement increases the likelihood that the Supreme Court will eventually decide whether prediction market sports contracts belong exclusively under federal commodities law or remain subject to state gambling regimes.
Kalshi has indicated it believes the ruling will not withstand further review.
State officials, including Tennessee Attorney General Jonathan Skrmetti, described the outcome as a victory for consumer safeguards that accompany licensed sports wagering. For now, operators offering similar event contracts in the Sixth Circuit face a clearer path for state enforcement while the broader legal contest continues.