Sixth Circuit Rules Kalshi’s Sports Contracts Fall Under State Regulation

A Sixth Circuit Court of Appeals panel ruled Friday that Kalshi’s sports related event contracts are not swaps, meaning they fall under state gaming regulations rather than the federal Commodity Futures Trading Commission. The ruling addressed two cases Kalshi brought against regulators in Ohio and Tennessee, seeking injunctions to block the states from suing it. An Ohio federal court had denied that request, while a Tennessee court had granted it. The panel agreed Kalshi had the right to bring the case but disagreed that its products count as federally regulated swaps.

Why the Court Says Sports Contracts Aren’t Swaps

The judges said Kalshi’s contracts depend on “events” but do not tie to outcomes with a financial, economic or commercial consequence as the law defines it. The ruling used a New York Giants Super Bowl win as an example, noting the result could be described differently depending on how the “event” itself is defined, and said nothing in the law requires excluding outcomes from that definition.

States vs Prediction Markets Over Sports Betting Rules

States have pushed to bring sports-related prediction markets under their own frameworks since these platforms grew after the 2024 election. States argue the products compete directly with state-regulated gambling but avoid state taxes, and that they let people as young as 18 participate, versus 21 at most state-regulated gambling operators.

Circuit Split Sets Up Supreme Court Showdown

This ruling adds to a growing split among appeals courts. The Third Circuit ruled the CFTC has jurisdiction over prediction markets, while the Eighth Circuit, like the Sixth now, found sports-related contracts are not swaps. The Third Circuit case has already been appealed to the Supreme Court, and this split makes it more likely the high court will take up the issue.