Sixth Circuit rules against Kalshi in Ohio and Tennessee

A three-judge panel of the US Court of Appeals for the Sixth Circuit has ruled that Kalshi is not entitled to preliminary injunctions blocking Ohio and Tennessee from applying their gambling laws to its sports-event contracts. The court affirmed the Ohio district court’s refusal of an injunction and vacated the one granted in Tennessee.

Judges Clay, Gibbons and Bloomekatz heard argument on 30 July and decided the consolidated appeals (Nos. 26-3196 and 26-5235) on 25 September. The opinion is recommended for publication.

Two separate holdings

The court gave two independent reasons. First, it held that Kalshi “has not shown that its sports-event contracts satisfy the statutory definition of a ‘swap’ so as to fall within the scope of the CFTC’s ‘exclusive jurisdiction’”. Kalshi’s case relies on the part of the definition covering contracts on events “associated with” a financial consequence. The panel read that requirement narrowly. It asked whether the underlying events “inherently have a financial consequence”, not whether they have “any tangential or hypothetical relation to a financial consequence at all—or even a likely one”. Kalshi had argued that prediction markets reveal information about probabilities. The court did not accept that this was enough.

Second, the panel held that even if the contracts were swaps, the Commodity Exchange Act “neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws”. It agreed with the Ninth Circuit that Congress “has explicitly not occupied the field of gambling”.

Because Kalshi had not shown it was likely to succeed on the merits, the court did not consider the other preliminary-injunction factors. Both cases go back to the district courts.

A deepening split

A footnote sets out the wider picture. The Third Circuit upheld an injunction in Kalshi’s favour against New Jersey (KalshiEX v. Flaherty). On 28 August the Ninth Circuit affirmed the Nevada district court’s dissolution of Kalshi’s injunction (KalshiEX v. Assad). Kalshi’s appeal in the Fourth Circuit, from a Maryland ruling against it, was still pending. The Sixth Circuit now joins the Ninth, leaving the Third as the only appeals court so far to side with Kalshi.

The panel also cited the dissent of Judge Roth in the Third Circuit case, which described sports-event contracts as “virtually indistinguishable from” sports bets.

The CFTC appeared as amicus. Amicus briefs were also filed by Better Markets, the Nevada attorney general’s office and tribal gaming interests.

Why it matters

The first holding has the wider reach. If an event contract on a game is not a “swap”, the argument goes beyond whether states are pre-empted: it calls into question whether such contracts sit within the CFTC’s exclusive jurisdiction at all. Regulatory teams at DCMs, and at brokers and FCMs offering access, should read this alongside the CFTC’s own work on defining which event contracts are swaps.

In practice, Kalshi and other DCMs face weaker legal cover in Ohio and Tennessee while the cases continue. Liquidity providers in sports contracts should plan for state-by-state access that can change at short notice. The decision also makes Supreme Court review more likely, since the appeals courts are now openly divided.

Sources

• KalshiEX LLC v. Schuler et al.; KalshiEX LLC v. Orgel et al., Nos. 26-3196/5235, US Court of Appeals for the Sixth Circuit, decided and filed 25 September 2026 — https://www.opn.ca6.uscourts.gov/opinions.pdf/26a0272p-06.pdf