Kalshi suffered another legal setback after the Sixth Circuit ruled that Ohio and Tennessee can enforce their sports betting laws against the prediction-market operator.
The court said Kalshi had not shown that its sports event contracts qualify as “swaps” under federal commodities law. It also ruled that federal law would not prevent the states from applying their gambling rules even if the contracts met that definition.
Court Rejects Kalshi’s Swap Argument
The case centers on the Commodity Exchange Act’s definition of swaps and whether sports outcomes are linked to financial, economic or commercial consequences.
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The Sixth Circuit found that any financial effects from sports outcomes are too indirect and speculative to meet the statutory standard. Kalshi began offering sports contracts in early 2025, prompting regulatory challenges in several states.
The ruling adds to a growing split among federal appeals courts. The Ninth Circuit also rejected Kalshi’s position, while the Third Circuit previously ruled in Kalshi’s favor in a New Jersey case.
Supreme Court Review Could Follow
The dispute could eventually reach the U.S. Supreme Court. New Jersey has already asked the justices to review its case.
The Commodity Futures Trading Commission has supported Kalshi’s position that federal law gives it authority over the contracts, while states have argued that the products fall under state gambling laws.
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