Court ruling
Sixth Circuit: Kalshi's sports contracts are not shielded from state law
The short answer
On September 25, 2026, a Sixth Circuit panel held that Kalshi's sports event contracts are not 'swaps' under the Commodity Exchange Act, so Ohio and Tennessee may regulate them under state sports-betting law. The ruling aligns with the Ninth Circuit and conflicts with the Third Circuit's pro-Kalshi position — a deepening federal circuit split that makes Supreme Court review increasingly likely.
In this article
The federal courts' split over whether Kalshi's sports event contracts are federally preempted widened in late September 2026. A Sixth Circuit panel ruled that the contracts are not 'swaps' for purposes of the Commodity Exchange Act, so state sports-betting law applies to them. The decision lets Ohio and Tennessee proceed against the prediction-market operator — and hands the industry its clearest sign yet that the question is heading to the Supreme Court.
What the court decided
Kalshi lists 'event contracts' — including markets that resolve on sports outcomes — on a CFTC-regulated exchange, and argues those contracts are swaps under exclusive federal jurisdiction, displacing state gambling law. The Sixth Circuit panel rejected that reading: the judges found that sports event contracts do not fit the statutory definition of a swap, so the CEA's exclusive-jurisdiction provision does not shield Kalshi from Ohio's and Tennessee's sports-wagering enforcement. The ruling addressed the contracts' legal character, not the merits of sports wagering itself.
The split as it now stands
Illustrative example
| Circuit | Direction | Consequence |
|---|---|---|
| Ninth Circuit | State law can apply | States in the circuit may treat the contracts as gambling |
| Sixth Circuit (Sept. 25, 2026) | Contracts are not 'swaps'; no CEA preemption | Ohio and Tennessee enforcement may proceed |
| Third Circuit | Pro-Kalshi: federal preemption | States in that circuit face a barrier to enforcement |
Why it matters beyond Kalshi
The fight is really about which regulator owns sports-linked event markets: the CFTC and its exchanges, or state gaming agencies. If sports event contracts are not swaps, every state line becomes a compliance boundary for prediction markets — the same architecture regulated sportsbooks already live under. If they are swaps, a single federal regime displaces 50 state frameworks. Other event-contract operators, sportsbook incumbents, tribal gaming interests and state attorneys general are all watching the same docket, because the answer prices their markets too.
For the mechanics of following a fast-moving regulatory story as documents change, see how to track a revised source document, and for the market these contracts touch, how to read US gaming revenue reports.
