Kalshi has asked the full Sixth Circuit to reconsider a September 25 ruling that favored Ohio and Tennessee sports regulators, allowing them to enforce gambling laws. The prediction market operator argues the decision conflicts with other federal appeals court rulings and that Congress granted the CFTC exclusive jurisdiction over such contracts.
The outcome of Kalshi's legal challenges could significantly impact the regulation of prediction markets in the US, determining whether they fall under federal commodities law or state gambling laws, and influencing the broader landscape of event-based contracts.
Kalshi has asked the full Sixth Circuit to reconsider a September 25 ruling that favored Ohio and Tennessee sports regulators, allowing them to enforce gambling laws. The prediction market operator argues the decision conflicts with other federal appeals court rulings and that Congress granted the CFTC exclusive jurisdiction over such contracts.
In its September decision, a three-judge panel found that Kalshi had not established its sports contracts as swaps, determining that if they did qualify, federal commodities law would not take precedence over state gambling laws. Consequently, the court affirmed Ohio's injunction denial and lifted an injunction against Tennessee regulators. The Ohio Casino Control Commission banned Kalshi from making sports contracts in March 2025, and Tennessee's Sports Wagering Council made a similar request in January 2026.
Kalshi's lawyers contend that Congress gave the CFTC "exclusive jurisdiction" over contracts traded on designated exchanges and that the Sixth Circuit's decision is inconsistent with other federal appeals court rulings and Sixth Circuit law. The company cited the CFTC's recent actions as grounds for a new hearing, claiming a legal distinction exists between exchange-traded event contracts and those placed with standard bookmakers.
On October 9, the Commodity Futures Trading Commission proposed including event contracts within the federal swap definition, covering sports, politics, cultural events, and weather. CFTC Chairman Michael Selig referred to these products as "commodity derivatives" under the commission's authority. The agency sought public comment on the proposal. Meanwhile, the CFTC issued an interim final rule excluding casino gambling and sportsbook wagers from the swap definition, effective upon publication.
The legal battles extend beyond Ohio and Tennessee, with differing outcomes in other circuits. The Third Circuit ruled in favor of Kalshi in New Jersey, while the Ninth Circuit ruled for Nevada regulators. Kalshi filed a separate request for full Ninth Circuit review in September after its Nevada loss. New Jersey authorities are seeking US Supreme Court review of the Third Circuit decision, with the NFL filing on October 8 in favor of intervention for sports prediction market regulation. Additionally, New York filed a lawsuit against Polymarket in September for allegedly operating an illegal gambling operation.
Pick the topics you care about. Get only what matters, on your cadence.