Kalshi seeks Sixth Circuit rehearing as gaming interests pile into the Supreme Court

On 9 October KalshiEX asked the full Sixth Circuit to rehear the panel decision that went against it in its cases against Ohio and Tennessee regulators. The filing was made on the same day the CFTC published its two rulemakings on the swap definition. In Washington, the Supreme Court docket in New Jersey’s case against Kalshi has filled with amicus briefs. Most come from gaming regulators, tribes and sports interests.

The rehearing petition

The petition was filed by Milbank on Kalshi’s behalf. It argues that the panel’s ruling “is irreconcilable” with two other appeals courts:

• Third Circuit, KalshiEX v. Flaherty: held that the Commodity Exchange Act (CEA) pre-empts state regulation of Kalshi’s contracts.
• Ninth Circuit, KalshiEX v. Assad (28 August): held that the CEA’s grant of exclusive jurisdiction “expressly preempts state law regulating swaps ‘traded or executed on’ a DCM”.

Kalshi notes that the Ninth Circuit went on to find its contracts outside that exclusive jurisdiction. It says that finding “relied heavily on a soon-to-be-replaced CFTC regulation”. The petition also says the Sixth Circuit panel departs from that court’s own 2025 Churchill Downs precedent.

Its opening section relies on the CFTC’s actions that day:

• the proposed rule that would further define “swap” to include event contracts
• the interim final rule excluding state-licensed casino-style gambling

Kalshi says these “highlight why the agency should have been heard”. It complains that the panel ruled after refusing to let the CFTC take part in oral argument.

The petition says the ruling would “criminalize the conduct of every DCM currently listing sports contracts — from Kalshi to the Chicago Mercantile Exchange”. It contrasts trading on an exchange “where the interstate market sets prices” with “betting against a bookmaker that can stack the odds in its own favor”. The second, it says, remains a matter for the states.

The certiorari docket

The Supreme Court case is No. 26-299, Flaherty v. KalshiEX. It is New Jersey’s petition to review the Third Circuit’s 6 April decision, which went in Kalshi’s favour.

• Timeline: the petition was filed on 2 September and docketed on 8 September. On 22 September the Clerk extended Kalshi’s response deadline from 8 October to 9 November.
• Amicus briefs supporting review: the docket lists briefs from the National Council of Legislators from Gaming States (22 September) and from the International Association of Gaming Regulators and others (2 October).
• 6–8 October: the Cabazon Band of Cahuilla Indians, Ohio and other states, Stop Predatory Gambling, former senator Christopher J. Dodd, 145 Indian tribes, the National Football League, former CFTC chairman Gary Gensler, the Casino Association of New Jersey and the American Gaming Association all filed briefs.

The docket entries do not state which side each brief supports. They are listed here by filer only.

Why it matters

The Sixth Circuit now disagrees with the Third and, at least in part, the Ninth on whether states can regulate trading on a federally designated exchange. That is the kind of split that tends to attract Supreme Court review. Kalshi’s response in No. 26-299 is due on 9 November, so the earliest the justices could consider the petition is late in the year.

For now, venue operators and the market makers on sports contracts face a different legal position in each circuit. The CFTC is working to shape the outcome. Both of its 9 October rulemakings are framed partly as answers to the courts. Risk and compliance teams should track the Sixth Circuit’s handling of the petition and the Fourth Circuit appeal that Kalshi’s filing notes is still pending.

Sources

• Kalshi petition for rehearing en banc, Sixth Circuit Nos. 26-3196/26-5235, 9 October 2026 — https://storage.courtlistener.com/recap/gov.uscourts.ca6.158038/gov.uscourts.ca6.158038.92.0.pdf
• Supreme Court docket No. 26-299 — https://www.supremecourt.gov/docket/docketfiles/html/public/26-299.html