Sixth Circuit backs states over Kalshi on sports betting contracts
Ruling clears the way for Ohio and Tennessee to treat Kalshi’s sports markets as gambling, not federally preempted swaps.
The US Court of Appeals for the Sixth Circuit unanimously ruled that Ohio and Tennessee may apply their gambling laws to sports-event contracts traded on prediction market Kalshi. The panel held that Kalshi’s sports-event contracts do not fit the statutory definition of a “swap” that would fall solely under the Commodity Futures Trading Commission’s authority. Writing for the court, Judge Julia Smith Gibbons said Kalshi failed to show its products qualify as swaps subject to the CFTC’s exclusive jurisdiction. The judges also stated that, even if these contracts were considered swaps, the Commodity Exchange Act does not clearly or implicitly override Ohio’s or Tennessee’s gambling regulations.
Why it matters
This decision strengthens states’ authority to treat prediction markets tied to sports as gambling, even when those markets are structured like financial products and invoke federal commodities law. Platforms offering similar contracts cannot rely on swap classification alone to avoid state gambling rules in these states, and future disputes will have to grapple with the court’s view that federal commodities regulation does not automatically override state control of sports wagering.
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Sources
- Ars Technica