Appeals court rules Ohio and Tennessee can regulate Kalshi under gambling laws

September 26, 2026 at 11:45 PM2 min

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A U.S. appeals court ruled Friday that Ohio and Tennessee can apply their gambling laws to Kalshi's event contracts. The 6th U.S. Circuit Court of Appeals rejected Kalshi's argument that its sports contracts are swaps under exclusive CFTC oversight. The decision deepens a split among federal appeals courts over regulation of prediction markets.

Key Facts

The 6th U.S. Circuit Court of Appeals ruled that Ohio and Tennessee can apply their gambling laws to Kalshi's event contracts.
The ruling overturned a preliminary injunction that had barred Tennessee from enforcing its gambling laws against Kalshi.
The court upheld a lower court's refusal to grant Kalshi a similar injunction in Ohio.
Tennessee Attorney General Jonathan Skrmetti called the decision a "great win" for the state.
Kalshi said it expects the ruling to be overturned.

Court Ruling

A three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati ruled that Ohio and Tennessee can apply their gambling laws to Kalshi's event contracts. Writing for the panel, Circuit Judge Julia Smith Gibbons said swaps generally refer to financial instruments used to hedge risk, not gaming-related contracts. She added that regulating gambling is a core part of a state's police power, and that the federal Commodity Exchange Act does not override Ohio's or Tennessee's gambling laws. Gibbons also questioned how betting on the number of corner kicks in a soccer match, or on a long-shot parlay, serves the federal law's goal of helping people manage financial risk.

Legal Impact

The ruling overturned a preliminary injunction that had barred Tennessee from enforcing its gambling laws against Kalshi. It also upheld a lower court's refusal to grant Kalshi a similar injunction in Ohio. The unanimous decision deepens a split among federal appeals courts over who gets to regulate the fast-growing industry: individual states or the federal Commodity Futures Trading Commission (CFTC). A split among appeals courts often makes Supreme Court review more likely, but there's no guarantee. Similar cases are pending in Connecticut, New York, Arizona, Minnesota, and other states.