The US Sixth Circuit Court of Appeals has found that sports contracts offered on prediction markets like Kalshi do not constitute “swaps,” and are not immune from state-sponsored gambling law enforcement.
“We hold that Kalshi has not shown that its sports-event contracts satisfy the statutory definition of a ‘swap’ so as to fall within the scope of the CFTC’s ‘exclusive jurisdiction,’” stated Sixth Circuit Judge Julia Gibbons.
“And, even assuming that Kalshi’s sports-event contracts are swaps, we alternatively hold that the CEA neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws. Thus, we affirm the Southern District of Ohio’s denial of a preliminary injunction, vacate the Middle District of Tennessee’s entry of a preliminary injunction, and remand for further proceedings consistent with this opinion.”
READ: Sixth Circuit Ruling – Kalshi vs. Tennessee and Ohio Gaming Authorities (September 25th, 2026)
With dwindling options aside from waiting for the Supreme Court to hear one or more prediction market cases next year or in 2028, Kalshi’s sports contracts may be vulnerable to additional geofencing restrictions. This is particularly true for jurisdictions within the Sixth Circuit’s judicial authority, which include Ohio and Tennessee.
Technically, Kalshi could request an en banc hearing (as it has done regarding the Ninth Circuit’s ruling), but a decision on such a request could be put on hold until the Commodity Futures Trading Commission (CFTC) publishes and implements anticipated changes to prediction market sports-contract regulations.
Although 2026 has been a record-breaking year for Kalshi in terms of sports trading volume, the prediction exchange has been plagued by forced geofencing of its most popular contracts in multiple jurisdictions. Most recently, Kalshi lawyers stated in court that the company has geographically restricted access on three tribal casino properties in California. Kalshi sports contracts are also outright blocked in the states of Massachusetts, Nevada, Washington, and Michigan.
A Prediction Market Court Rulings document maintained by prominent gaming lawyer Daniel Wallach has been updated in light of the decision by the Sixth Circuit. In a social media post uploaded on Friday, Wallach explains that:
“Kalshi has now lost 15 consecutive federal court rulings since the Minnesota decision. With today’s reversal of Tennessee, States have prevailed in 38 out of 43 court decisions involving preliminary injunctions, TROs, or stays/injunctions pending appeal, an 88% success rate.”
The trend shows that both state and federal courts are siding with state and tribal gaming authorities, who are attempting to block prediction market sports contracts from encroaching upon licensed sports betting. Despite Kalshi’s formal categorization as a CFTC-regulated exchange, it has been forced to limit its availability in a growing number of US-based jurisdictions.
At the current pace (and considering the increasingly unfavorable judicial decisions), Kalshi’s popular sports contracts could soon be unavailable to otherwise-eligible 18+ traders in more than 10% of the country.
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