US appeals court rules Kalshi sports contracts face state gaming laws

A three-judge panel of the US Sixth Circuit Court of Appeals ruled on 25 September 2026 that Kalshi's sports-related event contracts are not swaps. The decision subjects the prediction market platform to state gaming regulations rather than the rules of the federal Commodity Futures Trading Commission (CFTC).

The ruling resolves two cases Kalshi brought against regulators in Ohio and Tennessee. Kalshi had sought injunctions to prevent both states from suing the platform. A federal court in Ohio previously denied Kalshi's motion, while a federal court in Tennessee had granted it.

US states have argued that sports prediction contracts compete directly with state-regulated gambling platforms without paying state taxes. States have also raised concerns that prediction markets allow users as young as 18 to participate, whereas most state gambling platforms require users to be at least 21.

The Sixth Circuit judges noted that Kalshi's contracts do not depend on events linked to a potential financial, economic, or commercial consequence under federal statutory definitions. The decision deepens a split across US appellate courts: the Third Circuit previously ruled that the CFTC held jurisdiction over prediction markets, while the Eighth Circuit ruled that sports contracts were not swaps. The Third Circuit case is already on appeal to the US Supreme Court.