Kalshi Seeks Rehearing of Ruling on State Oversight of Sports Contracts
United States.- 15 October 2026 | www.zonadeazar.com Kalshi, the US prediction markets platform, has asked the Sixth US Circuit Court of Appeals to reconsider a ruling allowing Ohio and Tennessee to enforce their gambling laws against its sports event contracts.
The petition, filed on 9 October 2026, challenges the court’s 25 September decision, which rejected Kalshi’s arguments concerning the exclusivity of federal regulation.
The dispute has gained additional significance following new proposals from the Commodity Futures Trading Commission (CFTC) to classify event contracts as financial derivatives.
Kalshi Requests Judicial Reconsideration
The company has requested a rehearing of the Sixth Circuit’s September decision.
Its petition seeks reconsideration by the judges and potentially by the full appeals court through an en banc review.
Kalshi argues that federal commodities legislation grants the CFTC exclusive jurisdiction over contracts traded on designated exchanges.
According to the company, allowing individual states to apply their gambling laws to these products conflicts with the framework established by Congress.
However, these arguments remain subject to judicial consideration and have not been accepted by the appeals court.
The 25 September Ruling
The original decision was issued by a three-judge federal appellate panel.
The court found that Kalshi had not sufficiently demonstrated that its sports event contracts qualified as swaps under federal commodities law.
It also concluded that even if the contracts qualified as financial derivatives, this would not necessarily prevent states from enforcing their gambling regulations.
Consequently, the court:
- Upheld the denial of an injunction sought by Kalshi in Ohio.
- Lifted an injunction preventing regulatory enforcement in Tennessee.
- Allowed both states to continue pursuing their regulatory positions while litigation remains ongoing.
The ruling does not resolve every legal question surrounding prediction markets.
Ohio and Tennessee Defend State Authority
Regulatory action against Kalshi began before the latest appeal.
In March 2025, the Ohio Casino Control Commission moved to prevent Kalshi from offering sports contracts under its jurisdiction.
In January 2026, the Tennessee Sports Wagering Council took similar action.
Both authorities maintain that certain contracts linked to sporting outcomes may fall within their respective state gambling regulations.
Kalshi, however, argues that these instruments belong to federally regulated financial markets overseen by the CFTC.
The dispute raises a fundamental legal question concerning the boundary between federal derivatives regulation and state gambling authority.
CFTC Proposes Classifying Event Contracts as Swaps
On 9 October 2026, the CFTC introduced a regulatory proposal intended to clarify the classification of event contracts.
The proposal would bring certain contracts linked to the following categories within the federal definition of swaps:
- Sporting outcomes.
- Political events.
- Cultural events.
- Weather-related developments.
The initiative seeks to establish a clearer federal framework for these instruments.
The regulator announced a 30-day public consultation period, beginning upon publication of the proposal in the Federal Register.
However, the proposed classification has not yet become a final rule.
Traditional Gambling Products Excluded
At the same time, the CFTC issued an interim final rule distinguishing event contracts from conventional gambling products.
The measure expressly excludes the following from the definition of swaps:
- Traditional sportsbook wagers.
- Casino games.
- Other conventional gambling products.
The rule is scheduled to take effect upon publication in the Federal Register.
This distinction is significant because it establishes different regulatory categories for products that may share certain economic characteristics.
Kalshi cited both CFTC actions in support of its request for judicial reconsideration.
Diverging Federal Court Decisions
The dispute extends beyond Ohio and Tennessee.
Different federal courts have adopted contrasting interpretations concerning the regulation of sports event contracts.
Important developments include:
- Third Circuit: ruled in Kalshi’s favour in litigation involving New Jersey.
- Sixth Circuit: allowed Ohio and Tennessee to continue enforcing their gambling regulations.
- Ninth Circuit: adopted a position favourable to Nevada regulators.
These differences have increased legal uncertainty and complicated efforts to establish a consistent nationwide framework.
Kalshi has also requested a rehearing before the full Ninth Circuit following an adverse ruling.
New Jersey Seeks Supreme Court Review
New Jersey authorities have petitioned the US Supreme Court to examine the Third Circuit’s decision.
The petition seeks clarification of the regulatory powers applicable to sports event contracts offered through prediction market platforms.
Kalshi must respond to the petition by 9 November 2026.
Potential Supreme Court involvement could help resolve differing appellate interpretations and establish clearer boundaries for state regulatory authority.
However, the Court has not yet agreed to hear the case.
NFL Calls for State-Level Supervision
The National Football League (NFL) has also become involved in the regulatory debate.
On 8 October, the league submitted a filing supporting Supreme Court consideration of the dispute.
The NFL argues that state gambling regulators possess established mechanisms for supervising sports betting and protecting sporting integrity.
From this perspective, placing sports event contracts exclusively under federal oversight could create different obligations for prediction market operators and conventional sportsbooks.
The league’s position supports calls for state authorities to retain a significant role in regulating sports-related products.
Implications for Prediction Markets
The outcome of these legal proceedings could have substantial consequences for US prediction markets.
If Kalshi’s interpretation prevails, contracts traded on registered exchanges could fall primarily under federal supervision.
Alternatively, if courts confirm states’ authority to apply gambling laws, prediction market platforms could face different requirements across jurisdictions.
This uncertainty also affects companies seeking to develop contracts linked to sporting competitions and other future events.
The legal distinction between financial derivatives and traditional gambling remains the central issue.
Next Steps and Impact
The Sixth Circuit must now decide whether to rehear its 25 September ruling.
If the court rejects Kalshi’s petition, the decision allowing Ohio and Tennessee to pursue enforcement will remain in place. If review is granted, the court will reconsider the legal arguments.
Meanwhile, the CFTC will continue its public consultation process concerning the classification of event contracts as swaps.
Potential Supreme Court involvement in the New Jersey dispute will also be an important development.
The outcome of these proceedings could reshape the legal framework governing prediction markets in the United States, particularly regarding sports event contracts and the division of authority between federal and state regulators.
Editó: @fonta
