US Court Backs State Regulation of Kalshi Sports Contracts
United States.- 29 September 2026 | www.zonadeazar.com A US federal appeals court has ruled that Ohio and Tennessee may apply their state gambling laws to sports contracts offered by Kalshi, delivering another legal setback for the prediction market operator.
The Sixth Circuit decision deepens the dispute over whether sports event contracts fall exclusively under federal derivatives regulation or can also be treated as sports wagering by individual states.
Sixth Circuit Decision
A three-judge panel rejected Kalshi’s argument that the Commodity Futures Trading Commission, CFTC, has exclusive jurisdiction over its contracts.
Kalshi argued that the federal Commodity Exchange Act prevented Ohio and Tennessee from enforcing their sports betting laws.
The court found that the company had not established that federal law pre-empted state regulation in these cases.
Ohio and Tennessee Enforcement
The decision allows regulators in both states to proceed against Kalshi over sports contracts offered without complying with their gambling frameworks.
This could include licensing requirements and other obligations imposed on sports betting operators.
Kalshi’s Sports Contracts
Kalshi allows customers to trade event contracts linked to sporting outcomes.
The company maintains that these are federally regulated financial contracts rather than conventional wagers.
State authorities argue that the economic substance of certain sports contracts amounts to sports betting.
Federal Versus State Authority
Kalshi operates within a framework overseen by the CFTC.
Its legal position has been that this federal supervision prevents states from separately regulating the products as gambling.
The Sixth Circuit rejected that interpretation in the Ohio and Tennessee disputes.
Federal Courts Remain Divided
The ruling adds to a growing split among federal appeals courts.
The Ninth Circuit recently allowed Nevada to regulate Kalshi’s sports contracts.
The Third Circuit, however, previously adopted a position more favourable to Kalshi in its dispute with New Jersey.
That divergence increases the prospect of Supreme Court review.
Nevada Precedent
In August, the Ninth Circuit ruled that Nevada could enforce its gambling laws against Kalshi.
The court rejected the argument that classifying the products as financial contracts automatically removed them from state gaming regulation.
The Sixth Circuit decision now reinforces that approach.
New Jersey Seeks Supreme Court Review
New Jersey has already asked the US Supreme Court to resolve the wider jurisdictional dispute.
The state is challenging a Third Circuit ruling that supported Kalshi’s federal-pre-emption argument.
Conflicting appellate decisions have turned the matter into a national regulatory issue.
Other State Disputes
Kalshi is also involved in litigation or enforcement actions in several other jurisdictions.
Connecticut, Utah, Washington, Iowa and Michigan are among states that have challenged the company’s sports event contracts.
Missouri recently ordered several prediction market platforms to comply with state sports betting requirements or cease offering sports contracts.
Wider Prediction Market Impact
The dispute extends beyond Kalshi.
Polymarket, Crypto.com, Novig, Underdog and Robinhood are among companies expanding their prediction market offerings.
A definitive ruling on state authority could reshape how sports contracts are distributed across the United States.
Industry Context
Prediction markets have expanded rapidly in the US, particularly around sporting events.
That growth has increasingly brought them into conflict with state regulators overseeing licensed sports betting markets with established tax, licensing and consumer-protection systems.
The core question remains whether sports event contracts are fundamentally financial products, gambling products or subject to overlapping forms of regulation.
Next Steps or Impact
Kalshi can continue challenging state enforcement while Ohio and Tennessee regulators are now permitted to proceed under their existing gambling laws.
With federal appeals courts reaching different conclusions, pressure is increasing for the Supreme Court to establish a nationwide standard.
The outcome could define not only Kalshi’s future but the broader regulatory structure for US sports prediction markets.
Editó: @fonta
