Appeals court says Ohio and Tennessee can regulate Kalshi

A federal appeals court says Ohio and Tennessee can regulate Kalshi under state gambling laws. The 6th Circuit ruled Friday that Kalshi's event contracts are not shielded as CFTC-only financial swaps, overturning a Tennessee injunction and deepening a circuit split that could draw Supreme Court attention.

Key Takeaways

• The 6th U.S. Circuit Court of Appeals held that Ohio and Tennessee may apply gambling laws to Kalshi's event contracts.
• Judges rejected Kalshi's claim that its sports contracts are "swaps" under exclusive Commodity Futures Trading Commission (CFTC) oversight.
• The ruling overturned a preliminary injunction in Tennessee and upheld a lower court's refusal to grant one in Ohio.
• The unanimous decision deepens a federal appeals-court split that may make Supreme Court review more likely.
• Similar fights are pending in Connecticut, New York, Arizona, Minnesota, and other states.

What Did the Appeals Court Say About Ohio and Kalshi?

Kalshi lost another round Friday in its fight over whether states can treat prediction markets as gambling. A three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati ruled that Ohio and Tennessee can apply their gambling laws to Kalshi's event contracts, Mashable reported, citing Reuters.

For readers who follow how rules reshape everyday culture—from old betting parlors to today's app-based markets—this decision sits in a long Then & Now arc: states have long claimed power over gambling, while newer platforms argue they are federally supervised finance.

The panel's opinion matters immediately for Kalshi users and partners in those two states. It also sends a clear signal to other regulators watching the same industry grow at speed.

Then, gambling disputes were mostly local and slow-moving. Now, a single appellate opinion can reshape a national prediction-market business overnight—while still resting on the old idea that states police gaming within their borders.

Why Did the Court Reject Kalshi's "Swaps" Argument?

Kalshi's central argument is that its sports contracts are "swaps," financial products that fall under the CFTC's exclusive oversight rather than state gambling rules. The court rejected that claim.

Writing for the panel, Circuit Judge Julia Smith Gibbons said swaps generally refer to financial instruments used to hedge risk, not gaming-related contracts. She added that regulating gambling is a core part of a state's police power, and that the federal Commodity Exchange Act does not override Ohio's or Tennessee's gambling laws, according to Reuters.

Gibbons also 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 contrast—traditional risk hedging versus event wagers—frames the legal fight in plain terms for a US and UK audience watching American markets.

In short, the court treated Kalshi's sports-linked contracts more like gambling products than like classic financial tools meant to manage economic exposure. The opinion draws a line between hedging instruments and sports-adjacent event contracts that look like bets.

That distinction is the heart of the case. If sports contracts are swaps, federal exclusivity may follow. If they are gambling, state statutes can still apply. The 6th Circuit chose the second path.

How Does This Ruling Change the Injunction Picture?

The ruling overturned a preliminary injunction that had barred Tennessee from enforcing its gambling laws against Kalshi. It also upheld a lower court's refusal to grant Kalshi a similar injunction in Ohio.

That dual outcome leaves Kalshi without the temporary shield it sought in both states. Tennessee Attorney General Jonathan Skrmetti called the decision a "great win" for the state. Kalshi said it expects the ruling to be overturned.

For now, the practical effect is that Ohio and Tennessee regain clearer room to treat Kalshi's event contracts under their gambling statutes while the broader fight continues. An injunction is temporary by design; losing one does not end every legal theory Kalshi may still pursue.

Still, the messaging from both sides is already set. State officials see validation of traditional gambling authority. Kalshi signals confidence that a higher court will reverse course.

Could This Circuit Split Reach the Supreme Court?

The unanimous decision deepens a split among federal appeals courts over who gets to regulate the fast-growing industry: individual states or the federal Commodity Futures Trading Commission. A split among appeals courts often makes Supreme Court review more likely, but there is no guarantee.

SCOTUS receives thousands of petitions a year and agrees to hear very few. Even so, lawyers and markets will watch closely if other circuits keep disagreeing about CFTC exclusivity versus state gambling power.

Similar cases are pending in Connecticut, New York, Arizona, Minnesota, and other states. That national patchwork helps explain why Friday's Ohio-Tennessee ruling feels larger than a two-state dispute.

Prediction markets have moved from niche experiment to mainstream sports-adjacent betting in a short span. The legal map has not moved as neatly. Friday's opinion pushes the industry back toward a familiar American pattern: states asserting gambling authority unless Congress or the Supreme Court draws a brighter federal line.

Until a higher court or Congress settles the conflict, platforms, bettors, and state officials will keep operating under competing theories of who is in charge. The 6th Circuit has now spoken clearly on one side of that divide—and the appeals court says Ohio and Tennessee can keep pressing their gambling laws while the next chapter is written.