Sixth Circuit Rules Kalshi Sports Contracts Are Not Swaps, Letting Ohio and Tennessee Enforce Gambling Laws
A Sixth Circuit panel held Kalshi's sports contracts are not swaps and not preempted by federal law, clearing Ohio and Tennessee to enforce gambling laws against the exchange.
Why it matters
Whether Kalshi's sports contracts are swaps determines if CFTC registration shields them from state gambling law, and the answer now differs by circuit and by state, so the same contract can be legal in one state and exposed to enforcement in another. The CFTC's paired rules, which exclude casino-style gambling while adding event contracts, would give the agency a single national definition and cut against the state position the Sixth Circuit upheld.
Where the sources disagree
Whether Kalshi's sports contracts are swaps under CFTC jurisdiction
Swaps under Dodd-Frank, subject to CFTC exclusive jurisdiction, federal law likely preempts state rules
Cointelegraph, Unchained
Not swaps, therefore subject to state gambling regulation rather than CFTC rules
CoinDesk, Unchained, Crypto.News, Cointelegraph, Bitcoin.com News, Unchained
The Third Circuit held Kalshi's sports contracts are swaps and likely preempt New Jersey's rules, while the Sixth and Ninth Circuits reached the opposite conclusion.
Enforcement status of state gambling laws against Kalshi after the Sixth Circuit ruling
Ohio and Tennessee may enforce gambling laws against Kalshi
CoinDesk, Unchained, Crypto.News, Bitcoin.com News
Illinois sports wagering license rules and a related criminal provision are likely preempted and cannot be enforced for now
Bitcoin.com News
Ohio and Tennessee lost injunctions that shielded Kalshi from their regulators, while a Chicago judge three days later blocked Illinois from enforcing its licensing rules against Kalshi.
Key facts
A unanimous three-judge Sixth Circuit panel ruled on Sept. 25 that Kalshi had not shown its sports contracts are swaps under CFTC jurisdiction and that the Commodity Exchange Act does not preempt Ohio or Tennessee gambling laws.
Reported by CoinDesk
The court upheld an Ohio district judge's refusal to block the state's Casino Control Commission and vacated an injunction that had barred Tennessee's sports wagering officials from acting against Kalshi.
Reported by Crypto.News
Judge Julia Smith Gibbons wrote the Sixth Circuit opinion, joined by Judges Eric Clay and Rachel Bloomekatz.
Reported by Bitcoin.com News
The panel rejected Kalshi's argument that its contracts qualify as swaps because they turn on events associated with a potential financial, economic or commercial consequence, calling industry hedging examples a far cry from establishing that sports-event contracts are inherently associated with a financial consequence.
Reported by Unchained
An industry group backing Kalshi pointed to a Spanish soccer club hedging against relegation and a bar hedging a free-drinks promotion on the Knicks.
Reported by Unchained
The Third Circuit held in an April decision that Kalshi was likely to succeed in arguing federal law preempts New Jersey's regulations, while the Ninth Circuit sided with Nevada a month before the Sixth Circuit ruling.
Disputed figureReported by Cointelegraph
Kalshi has a record of one win and two losses at federal appeals courts, with a Fourth Circuit ruling on Maryland still pending, and its reply to New Jersey's Supreme Court petition is due Nov. 9.
Reported by Bitcoin.com News
On Oct. 2, U.S. District Judge Martha M. Pacold granted in part requests from Kalshi, Coinbase and the U.S. government, finding Illinois' sports wagering licensing rules and a related criminal provision likely preempted, but held off on the state's new prediction market fees.
Reported by Bitcoin.com News
What happened
On Sept. 25, a unanimous three-judge panel of the Sixth Circuit Court of Appeals ruled in two consolidated Kalshi cases, KalshiEX LLC v. Schuler (Ohio) and KalshiEX LLC v. Orgel (Tennessee), that Kalshi had not shown its sports contracts meet the legal definition of a swap, the class of derivatives over which the CFTC claims exclusive jurisdiction, and that even if they were swaps the Commodity Exchange Act would not preempt Ohio's or Tennessee's gambling laws. The court upheld a district judge's refusal to block Ohio's Casino Control Commission and vacated an injunction that had shielded Kalshi from Tennessee's sports wagering officials, sending both cases back to the district courts. Judge Julia Smith Gibbons wrote the opinion with Judges Eric Clay and Rachel Bloomekatz, and the ruling rejected Kalshi's argument that its contracts qualify because they turn on events associated with a potential financial, economic or commercial consequence; an industry group cited a Spanish soccer club hedging relegation and a bar hedging a Knicks promotion, which the panel called isolated examples a far cry from showing sports contracts are inherently tied to financial consequence or commonly used to hedge risk. Kalshi had conceded in filings that for a layperson some contracts' economic effects are hard to see, and Crypto.News reports the 49-page opinion also notes that Ohio and Tennessee each set 21 as the minimum age for sports wagering and that neither state has issued Kalshi a gaming license. The decision widens a circuit split: the Third Circuit held in April that Kalshi's sports contracts are swaps under Dodd-Frank and likely preempt New Jersey's rules, while the Ninth Circuit sided with Nevada a month earlier. Kalshi's record now stands at 1-2 at the federal appellate level with a Fourth Circuit case on Maryland pending, and states' lawmakers and the NFL have filed amicus briefs urging the Supreme Court to resolve the question; Kalshi's reply to New Jersey's petition in Flaherty v. KalshiEX is due Nov. 9. The fight did not end there, because the CFTC proposed on Oct. 9 to write event contracts, including sports, politics, cultural and weather events, into its swap definition at 17 CFR 1.3 while an interim final rule excludes casino-style gambling products from that same definition, and a Chicago federal judge granted Kalshi a partial preliminary injunction against...
How the story developed
- First report
First report by Bitcoin Insider
CFTC Mention-Market Warning: Santos Action Disputed
- Independent corroboration
Independently corroborated by CryptoSlate
CFTC staff presses exchanges on political speech prediction market bets, asks how to prevent manipulation
- Update
Sixth Circuit panel rules Kalshi sports contracts are not swaps
A unanimous three-judge panel held Kalshi had not shown its sports contracts meet the swap definition and that the CEA does not preempt Ohio or Tennessee gambling laws, in KalshiEX LLC v. Schuler and KalshiEX LLC v. Orgel.
- Update
Appeal ruling creates split with Third and Ninth Circuits
Reports noted the Third Circuit sided with Kalshi on New Jersey in April and the Ninth Circuit sided with Nevada in August, setting up a possible Supreme Court case.
- Official statement
CFTC proposes adding event contracts to the swap definition
The agency sent two rules to OIRA on Sept. 28: a proposed rule adding event contracts to the swap definition for public comment, and an interim final rule excluding casino-style gambling products that takes effect on publication.
- Official statement
Official statement from Bitcoin.com News
Sixth Circuit Turns Kalshi’s Own Words Against It in Two-State Loss
- Update
Kalshi's reply to New Jersey's Supreme Court petition due Nov. 9
Bitcoin.com News reported the deadline for Kalshi's response in the New Jersey Supreme Court matter, which follows the Third Circuit ruling for Kalshi.
- Update
Kalshi wins partial preliminary injunction against Illinois
Judge Martha M. Pacold found Illinois' sports wagering license regime and a related criminal provision likely preempted by federal law, Kalshi's first federal court win since July, while leaving prediction market fees unenjoined.
- Official statement
NFL asks Supreme Court to rule sports contracts are gambling, not swaps
The NFL filed an amicus brief supporting New Jersey officials in Flaherty v. KalshiEX, citing $1.8 billion of $3.3 billion traded across prediction markets on the first Sunday of the NFL season as tied to the NFL.
How coverage built up
Independent sources over time, counted the way the consensus panel counts them: a republication of a wire story does not move the line.
- 24 Sept 2026, 08:35 UTC: Bitcoin Insider — 1 independent source, 1 reports
- 24 Sept 2026, 14:30 UTC: CryptoSlate — 2 independent sources, 2 reports
- 25 Sept 2026, 21:17 UTC: CoinDesk — 3 independent sources, 3 reports
- 26 Sept 2026, 00:15 UTC: Unchained — 4 independent sources, 4 reports
- 26 Sept 2026, 03:23 UTC: Bitcoin Insider — 5 independent sources, 5 reports
- 26 Sept 2026, 08:57 UTC: Crypto.News — 6 independent sources, 6 reports
- 26 Sept 2026, 13:21 UTC: Cointelegraph — 7 independent sources, 8 reports
- 29 Sept 2026, 06:30 UTC: Bitcoin.com News, official — 8 independent sources, 10 reports
- 30 Sept 2026, 11:46 UTC: Decrypt — 9 independent sources, 11 reports
- 2 Oct 2026, 23:10 UTC: The Defiant — 10 independent sources, 15 reports
- 9 Oct 2026, 21:35 UTC: CoinGape — 11 independent sources, 21 reports
- 11 Oct 2026, 09:15 UTC: The Daily Hodl — 12 independent sources, 27 reports
- 13 Oct 2026, 18:16 UTC: Protos — 13 independent sources, 29 reports
Affected entities
Also mentioned: Robinhood, Bitcoin, Paul Atkins, Crypto.com, Ethereum, Federal Reserve, China
Original sources
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