Key Takeaways
A unanimous Sixth Circuit panel ruled on September 25, 2026 that Kalshi's sports event contracts are not swaps under the Commodity Exchange Act.
The decision lets Ohio and Tennessee enforce their gambling laws against the prediction market, rejecting Kalshi's claim that CFTC oversight preempts the states.
The ruling deepens a circuit split, with the Third Circuit siding with Kalshi and the Ninth Circuit against it, raising the odds of Supreme Court review.
A federal appeals court ruled on Friday, September 25, 2026, that the prediction market Kalshi cannot use its federal registration to block states from regulating its sports event contracts. The unanimous Sixth Circuit panel, in an opinion by Senior Judge Julia Smith Gibbons, found that Kalshi had not shown those contracts qualify as swaps under the Commodity Exchange Act, The Block reported.
Because the contracts are not swaps, the court held, oversight by the Commodity Futures Trading Commission does not preempt state gambling law. Ohio and Tennessee can now enforce their own statutes against the contracts, which let users trade on the outcomes of games.
The decision undercuts the core of Kalshi's national business, which rests on the argument that a single federal regulator, not 50 states, governs its markets. Kalshi has leaned on that claim to keep operating while states from Nevada to New Jersey tried to shut its sports products down.
The ruling also sharpens a growing divide among the courts. In April 2026, the Third Circuit sided with Kalshi in a New Jersey case, finding the contracts likely are swaps. In August, the Ninth Circuit reached the opposite view in a Nevada case. The Sixth Circuit now joins the states, leaving a 2-to-1 split among the appeals courts. New Jersey has already asked the Supreme Court to take up the question, and this decision adds pressure for the justices to settle it.
The fight is really about who gets to decide what a financial contract is, an argument that runs straight through crypto. WYDE has tracked the same jurisdictional tug-of-war in the CFTC's fraud investigation into rival Polymarket and in Senate Banking Democrats' push for a public hearing on prediction markets. Clear rules on what counts as a regulated instrument, and who writes them, are the scaffolding every onchain market is waiting on. Worth watching what the Supreme Court does next.
People Also Ask
What did the Sixth Circuit rule about Kalshi?
On September 25, 2026 it held that Kalshi's sports event contracts are not swaps under the Commodity Exchange Act, so federal oversight does not block state regulation.
Can states regulate Kalshi's sports contracts now?
In the Sixth Circuit, yes. Ohio and Tennessee can enforce their gambling laws against the contracts, though rulings differ in other circuits.
What is the Kalshi circuit split?
The Third Circuit sided with Kalshi in April 2026 and the Ninth Circuit ruled against it in August, and the Sixth Circuit's September decision deepens that 2-to-1 divide.
Will the Supreme Court hear the Kalshi case?
It is increasingly likely. New Jersey has already petitioned for review, and the widening circuit split adds pressure for the justices to decide the issue.
Sources
Sixth Circuit Court of Appeals, The Block, CNBC, Sportico.