Ohio and Tennessee Gain Ground Against Kalshi in Federal Court
United States.- 9 October 2026 | www.zonadeazar.com Ohio and Tennessee have secured a favourable court ruling in their disputes with Kalshi after a federal appeals court held that both states may continue applying their gambling laws to sports event contracts offered by the platform.
The decision represents another setback for Kalshi’s argument that its products fall exclusively under federal Commodity Futures Trading Commission, CFTC, oversight.
Sixth Circuit Ruling
The decision was issued on 25 September 2026 by the US Court of Appeals for the Sixth Circuit in Cincinnati.
A unanimous three-judge panel ruled on the related Ohio and Tennessee cases.
Ohio Can Continue Enforcement
In Ohio, the appeals court affirmed a lower federal court decision denying Kalshi a preliminary injunction.
The ruling allows the state to continue seeking to enforce its sports betting laws against the company’s sports-event contracts.
Tennessee Regains Enforcement Powers
The outcome was even more significant in Tennessee.
A lower court had previously granted Kalshi an injunction preventing the state from enforcing its sports betting laws.
The Sixth Circuit vacated that protection and sent the case back to the lower court for further proceedings.
Kalshi Failed to Establish Contracts Are Swaps
Kalshi argues that its event contracts qualify as swaps regulated under the Commodity Exchange Act.
Under that interpretation, the CFTC would have exclusive jurisdiction and states would be unable to treat the products as sports wagering.
The Sixth Circuit found that Kalshi had not demonstrated a sufficient likelihood of success on that argument.
Pre-emption Argument Also Rejected
The court went further and held that even if the sports contracts were treated as swaps, the Commodity Exchange Act would not automatically pre-empt Ohio or Tennessee gambling laws.
That conclusion is one of the most significant elements of the ruling.
Traditional State Authority
Judge Julia Smith Gibbons said determining what constitutes gambling and regulating such activity sits at the core of traditional state police powers.
The court therefore rejected the idea that federal commodities regulation completely removes that authority.
Questions Over Financial Purpose
The decision also raised questions over whether certain sports contracts perform the traditional functions associated with derivatives markets.
The panel questioned how products tied to sporting statistics or large multi-leg parlays advance objectives such as risk management or financial price discovery.
Minimum-Age Differences
One continuing point of conflict between states and prediction markets is minimum age.
Kalshi allows participation from the age of 18, while many regulated US sports betting markets require customers to be at least 21.
States argue that this creates a route around protections imposed on licensed sportsbooks.
Kalshi Opposes State-by-State Regulation
Kalshi maintains that different rules in every state are inconsistent with the nationwide framework Congress established for derivatives markets.
The company argues that the CFTC should provide a single federal regime for its products.
US Courts Remain Divided
The wider legal landscape remains unsettled.
Other federal courts have taken different approaches.
In Illinois, for example, a federal judge recently granted Kalshi a preliminary injunction after finding that certain contracts could be swaps protected by federal pre-emption.
Ohio Already Steps Up Enforcement
Following the Sixth Circuit ruling, Ohio has intensified its action against the sector.
The Ohio Casino Control Commission recently ordered 10 prediction-market operators and brokers to stop offering sports contracts in the state.
Kalshi was not included in that round because its position remains directly tied to the separate litigation.
Tennessee Welcomes Decision
Tennessee Attorney General Jonathan Skrmetti welcomed the ruling as a victory for the state.
His office argues that Kalshi attempted to avoid the regulations, taxes and consumer safeguards imposed on licensed sports betting operators.
Litigation Continues
The Sixth Circuit ruling does not represent a final judgment on every issue in the underlying disputes.
The cases will now return to lower courts for further proceedings.
The decision primarily addresses preliminary injunctions and Kalshi’s likelihood of success at this stage of the litigation.
Next Steps or Impact
The ruling materially strengthens the positions of Ohio and Tennessee and provides additional support for other states seeking to apply gambling laws to sports prediction markets.
However, conflicting decisions across federal jurisdictions leave open the possibility that the issue could ultimately reach the US Supreme Court.
Until then, the sector will continue operating within a fragmented legal landscape shaped by tension between federal CFTC oversight and states’ traditional authority over sports wagering.
Editó: @fonta
