The Sixth Circuit Court of Appeals has sided with Ohio and Tennessee in their long-running fight against prediction market platform Kalshi. A three-judge panel ruled unanimously that the company's sports event contracts don't qualify as swaps under the federal Commodity Exchange Act — which means Kalshi's CFTC registration doesn't let it ignore state gambling laws.
For Ohio, that means the state can keep restricting Kalshi's sports contracts: the court upheld the denial of the preliminary injunction Kalshi had sought. Tennessee's outcome stings more — the appeals court vacated an injunction Kalshi had already won and sent the case back to district court, clearing the way for local regulators to act.
Judge Julia Smith Gibbons put the core problem almost dryly: a market has no real need to know the odds that a broadcaster will say a random word on air — yet contracts like that make up part of Kalshi's lineup. A swap, the court held, has to hinge on an event's direct financial consequences, not a side effect on advertisers and sponsors. The judges added that even if the contracts were swaps, that still wouldn't strip states of their power to regulate gambling within their own borders.
Kalshi has spent years building its business on the premise that federal CFTC registration frees it from getting a license in every state — that was supposed to be its edge over traditional sportsbooks. That premise is now fraying at the seams: the Third Circuit backed the company against New Jersey in April, the Ninth Circuit sided with Nevada in August, and now the Sixth Circuit has ruled against Kalshi on Ohio and Tennessee. A Maryland case awaits a Fourth Circuit ruling, and New Jersey's attorney general already asked the Supreme Court on September 2 to review the earlier decision.
Kalshi spokesperson Dani Lever maintains the law doesn't require a swap to carry "intrinsic" financial consequences — but with the circuit split widening, that argument is getting harder to sell to anyone outside the company's own legal team. Sooner or later, the fight over what prediction markets actually are will land before the Supreme Court. The open question is how many more states Kalshi loses before it gets there.
