A federal appeals court cleared Ohio and Tennessee to apply state gambling laws to Kalshi’s sports event contracts, rejecting the prediction market’s bid for exclusive federal oversight.
A three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati ruled Friday that the two states may enforce their gambling statutes against Kalshi’s event contracts. The decision was unanimous.
Circuit Judge Julia Smith Gibbons wrote for the panel and rejected Kalshi’s core claim that its sports contracts are “swaps” under exclusive oversight by the Commodity Futures Trading Commission, the federal agency that polices derivatives markets. The ruling deepens a split among federal appeals courts over who gets to regulate this industry, and it lands as similar fights continue in other states.
Mashable reported that the panel overturned a preliminary injunction that had blocked Tennessee from enforcing its gambling laws against Kalshi. It also upheld a lower court’s refusal to give Kalshi a matching shield in Ohio.
Kalshi’s argument turned on the federal Commodity Exchange Act and the idea that CFTC power crowded out state gambling rules. Gibbons was not persuaded.
She said swaps generally refer to financial instruments used to hedge risk, not gaming-related contracts. Regulating gambling, she added, is a core part of a state’s police power, the traditional authority states use to set rules for public health, safety, and morals. The Commodity Exchange Act does not override Ohio’s or Tennessee’s gambling laws, the panel held.
Gibbons also pressed the practical point. She questioned how betting on the number of corner kicks in a soccer match, or on a long-shot parlay, serves the federal law’s goal of helping people manage financial risk. That is not abstract theory. It is the difference between a hedge and a wager.
Tennessee Attorney General Jonathan Skrmetti called the outcome a “great win” for the state. Kalshi said it expects the ruling to be overturned.
The Cincinnati panel did not write on a blank slate. Prediction markets have tried to frame sports contracts as federally protected financial products and keep state gambling enforcers at bay. Ohio and Tennessee pushed back. The 6th Circuit sided with the states.
That matters beyond two statehouses. Similar cases are already pending in Connecticut, New York, Arizona, Minnesota, and other states. A divided map of federal appeals rulings raises the odds of a longer national fight over whether platforms can rebrand sports betting-style products as “event contracts” and claim a single federal regulator as a shield.
For now, the holding is plain. Ohio and Tennessee may treat Kalshi’s event contracts under their gambling laws. The preliminary block on Tennessee enforcement is gone. The Ohio injunction Kalshi wanted remains denied.
Federal preemption is a real doctrine, not a magic wand. When a product looks like a corner-kick parlay, states do not have to pretend it is a risk hedge because a company prefers the CFTC’s lane. Gibbons tied the ruling to that common-sense line and to the states’ long-standing power to police gambling.
Kalshi can keep arguing on appeal. Skrmetti and the states already have a published win that treats sports event contracts as what they functionally are under state law. The panel refused to let a federal label erase that reality.
If a bet walks and talks like gambling, states retain the power to regulate it, and federal word games should not strip that authority away.